LEGAL  ASPECTS 
OF  THE 

TRANSFER  OF  SECURIT 

H.BRUACAMPBFJjil 


UC-NRLF 


fll3 


ESTMENT  BANKERS  ASSOC 


GIFT  OF 


LEGAL  ASPECTS  OF  THE 
TRANSFER  OF  SECURITIES 


Legal  Aspects  of  the 
Transfer  of  Securities 


BY 
H.  BRUA  CAMPBELL,  LLB.  (Harv.) 

Member  of  the  New  York  Bar 

Lecturer  on  Business  Law, 
Columbia  University 


New  York 

Doubleday,  Page  &  Company 
for 

Investment  Bankers  Association 

of  America 

1920 


Cx 


*b 


Copyright,  1920,  by 
INVESTMENT  BANKERS  ASSOCIATION  OF  AMERICA 

All  rights  reserved,  including  that  of 

translation  into  foreign  languages, 

including  the  Scandinavian 


INVESTMENT  BANKERS  ASSOCIATION 
OF  AMERICA 

Education  Committee 

Lawrence  Chamberlain 
E.  W.  Bulkley 


Neither  the  Investment  Bankers 
Association  of  America  nor  its 
Education  Committee  assumes 
responsibility  for  any  statements 
made  in  this  book  or  in  any  books 
referred  to  in  this  book.  The 
books  referred  to  were  selected  with 
regard  to  their  general  availability 
and  without  prejudice  to  any  other 
books  treating  of  the  same  subjects. 


435944 


PREFACE 

A  substantial  part  of  the  work  of  investment 
banking  and  brokerage  houses  has  to  do  with 
the  transfer  of  securities.  Such  concerns  re- 
ceive certificates  of  stock  or  registered  bonds 
*rom  their  customers  or  correspondents  with 
instructions  to  have  them  transferred  out 
of  the  name  of  the  registered  owner  and  into 
some  other  name  on  the  books  of  the  corpor- 
ation. 

In  order  to  effect  the  transfer  it  is  necessary 
that  the  stock  certificates  or  bonds  be  presented 
at  the  transfer  office  of  the  corporation  whose 
securities  are  sought  to  be  transferred  accom- 
panied by  the  various  documents  and  proofs 
required  by  the  transfer  agent  for  the  pro- 
tection of  the  corporation  in  making  the  de- 
sired transfer. 

The  transfer  agent,  on  the  one  hand,  is  alert 
to  exact  from  the  registered  owner  all  docu- 
ments and  proofs  reasonably  necessary  to 
establish  the  right  to  have  the  transfer  made 
and  to  afford  adequate  protection  to  the  cor- 
poration in  transferring  the  security.  On  the 
other  hand,  the  registered  owner  of  the  security 
or  his  representative  or  agent  is  actuated  solely 

[v] 


by  the  desire  to  effect  the  transfer  with  a  mini- 
mum of  inconvenience  and  delay. 

A  familiarity  with  the  general  requirements 
and  regulations  of  transfer  offices  and  with  the 
reasons  underlying  such  requirements  will 
greatly  promote  the  efficient  handling  by  in- 
vestment, banking,  and  brokerage  houses  of 
these  transfers.  Such  an  understanding  will 
serve  to  expedite  the  desired  transfers  and 
thereby  promote  the  best  interests  of  custo- 
mers. 

For  the  above  reasons  it  was  the  belief  of  the 
Education  Committee  of  the  Investment  Bank- 
ers Association  of  America  that  a  small  book 
dealing  with  the  legal  aspects  of  the  transfer  of 
securities  would  serve  a  useful  purpose.  Ac- 
cordingly the  author,  who  has  had  a  number  of 
years'  experience  in  passing  upon  the  legal 
phases  of  transfers  of  securities,  was  requested 
by  the  committee  to  prepare  a  short  volume  on 
this  subject,  which  is  offered  in  the  hope  that 
it  will  enable  a  better  understanding  of  the  legal 
principles  involved  in  these  transfers  and  of  the 
requirements  generally  imposed  by  corporations 
preliminary  to  transfer. 

The  author  has  received  many  valuable  sug- 
gestions from  the  printed  lectures  of  Messrs.  F. 
L.  Maraspin  and  H.  B.  Driver,  delivered  during 
the  year  1917  before  the  Boston  Chapter  of  the 
American  Institute  of  Banking,  and  published 
under  the  title  "Fundamental  Principles  of 
Stock  Transfers." 

Mr.  Hastings  Lyon  and  Mr.  F.  C.  Nicodemus, 

[vi] 


.,  both  of  the  New  York  bar,  as  well  as  Mr.  E. 

.  Bulkley,  of  Chicago,  and  Mr.  Orton  Brewer, 
of  New  York,  have  read  the  manuscript,  and 
have  greatly  assisted  in  its  preparation  by  ex- 
pert suggestion  and  criticism. 

H.  BRUA  CAMPBELL. 
New  York  City,  October  4,  1920. 


[  vii 


CONTENTS 

PAGB 

SOME  DEFINITIONS 3-5 

Corporation 
Public 
Private 
Stock  or  Business 

Capital  Stock 
Common 
Preferred 

Stock  Certificates 5-6 

Form 

TRANSFERS  OF  STOCK 7-19 

Right  to  Transfer 

Steps  Involved 

Ways  in  Which  Stock  May  be  Assigned 

Form  of  Assignment 

Various  Provisions  in  Powers  of  Assignment 

Effect  of  Words  of  Conveyance 

The  Transferee 

Number  of  Shares 

Power  of  Attorney 

Power  of  Substitution 

Date 

Signature 

Witnesses 

Guarantee 

Notarial  Acknowledgments 

Mistakes  in  Issuance  of  Certificates  .       19 


KINDS  OF  TRANSFERS 20-44 

By  Individuals 20-24 

Married  Women 

Infants  and  Others  Under  Legal  Disability 

Attorneys  in  Fact 

Assignee  or  Trustee  in  Bankruptcy 

By  Joint  Tenants  and  Tenants  in 
Common 24-25 

By  Partnerships 25-26 

By  Corporations 26-27 

By   Membership    Corporations    and 

Unincorporated  Associations    .      .         28 

By  Fiduciaries 28-44 

Executors 

Administrators 

Trustees 

Action  by  Joint  Fiduciaries 

Guardians 

Liability  of  Corporation  for  Refusal 

to  Transfer 45 

Liability  of  Corporation  for  Erron- 
eous or  Wrongful  Transfer  .  .  46-47 

Stock  Transfer  Tax  Laws.      .      .      .  47-51 

New  York 
Federal 

Inheritance  Transfer  Tax  Laws  .      .   52-58 
New  York 
Federal  Estate  Tax 

Lost  or  Destroyed  Certificates  of 

Stock 58-59 

Stolen  or  Lost  Certificates  Endorsed 
in  Blank  .  .  61-68 


TRANSFER  OF  CORPORATE  BONDS      .     .  68-76 

Definitions 

Negotiable  and  Non-Negotiable  Bonds 

Uniform  Negotiable  Instruments  Law 

Coupon  Bonds 

Registered  Bonds 

Form  of  Assignment 

U.  S.  Government  Bonds 

Lost  or  Destroyed  Bonds 

Stolen  Bonds 

APPENDIX 76-105 

Uniform  Stock  Transfer  Law 

Rulings  of  New  York   State  Comptroller 

Relating  to  Taxes  on  Transfers  of  Stock 
Transfer  Rules  of  a  Leading  Corporation 
Rules  of  New  York  Stock  Exchange 

Relating  to  Transfers 
Regulations    of     Treasury      Department 

Relating  to  Transfer  of  Liberty  Bonds 

and  Victory  Notes 


LEGAL  ASPECTS  OF  THE 
TRANSFER  OF  SECURITIES 


SOME  DEFINITIONS 

A  corporation  is  an  artificial  entity 'created 
by  statute  law  and  endowed  with  many  of  the 
legal  capacities  of  individuals,  as  for  example 
the  power  to  take,  hold,  and  convey  property, 
make  contracts,  sue,  and  be  sued. 

Corporations  may  be  divided  into  two  classes, 
public  and  private. 

A  public  corporation  is  a  political  entity 
created  for  a  governmental  purpose,  as  a  county, 
city,  and  the  like. 

A  private  corporation  is  created  for  the  promo- 
tion of  some  interest  in  which  its  members  are 
concerned. 

Private  corporations  may  in  turn  be  divided 
into  two  main  classes — stock  corporations, 
which  are  for  private  pecuniary  gain,  and  non- 
stock or  membership  corporations  which  are  for 
a  variety  of  purposes  and  which  comprise  clubs, 
charitable  societies,  educational  institutions,  and 
the  like. 

Stock  corporations,  or  business  corporations  as 
they  are  called,  are  formed  for  the  purpose  of 
enabling  a  number  of  persons  to  unite  their 
capital  in  one  enterprise,  with  two  important 
results:  (i)  holders  of  stock  are  enabled  to 

m 


transfer: there: stock  to  other  holders  without 
•'affecting-  the  business  *  of  the  corporation;  and 
(2)  holders  of  stock  are  exempt  from  any  personal 
liability  for  the  debts,  contracts,  or  torts  of  the 
corporation.  (Huffcut's  Elements  of  Business 
Law,  p.  248.) 

The  capital  stock  of  a  corporation  is  the 
amount  fixed  by  the  corporate  charter  to  be 
subscribed  and  paid  in  or  secured  to  be  paid  in 
by  the  shareholders  of  a  corporation,  either  in 
money  or  in  property,  labor  or  services,  on  the 
organization  of  the  corporation  or  afterward. 

The  capital  stock  is  divided  into  shares  which 
usually  have  a  specified  face  or  par  value,  al- 
though in  recent  years  many  corporations  have 
been  formed  having  a  capital  stock  without 
nominal  or  par  value. 

A  share  of  stock  is  the  interest  or  right  which 
the  owner  has  in  the  management  of  a  corpora- 
tion and  in  its  surplus  profits  and,  on  a  dis- 
solution, in  all  of  its  assets  remaining  after  the 
payment  of  its  debts. 

The  stock  of  a  corporation  may  be  simply 
capital  stock  or  it  may  be  divided  into  classes 
designated  as  preferred  and  common. 

Common  stock  has  been  defined  to  be  that 
stock  which  entitles  the  owner  of  it  to  an  equal 
pro  rata  division  of  profits,  if  there  are  any,  no 
stockholder  or  class  of  stockholder  having  any 
preference  or  advantage  in  that  respect  over 
any  other  stockholder  or  class  of  stock- 
holders. 

Preferred   stock   is    stock    which    gives    the 

[41 


holder  a  preference  over  the  holders  of  common 
stock  with  respect  to  the  payment  of  dividends 
and  also  in  some  instances  with  respect  to  the 
distribution  of  capital.  (Fletcher  on  Private 
Corporations,  pp.  5584-5601.) 

A  stock  certificate  is  a  written  acknowledg- 
ment by  the  corporation  of  the  interest  of  a 
shareholder  in  the  corporate  property  and 
franchises.  It  expresses  the  contract  between 
the  shareholder  and  the  corporation  and  his 
co-shareholders. 

The  certificate  of  stock  is  not  the  stock  itself 
but  merely  the  evidence  of  the  holder's  owner- 
ship of  the  stock  and  of  his  rights  as  a  stock- 
holder to  the  extent  specified  therein,  just  as  a 
promissory  note  is  merely  the  evidence  of  the 
debt  secured  thereby  and  as  title  deeds  are 
merely  evidence  of  the  ownership  of  the  land. 
(Cook  on  Corporations,  7th  Ed.,  p.  64.) 

Form  of  Stock  Certificate 

Following  is  a  form  of  stock  certificate: 

INCORPORATED  UNDER  THE  LAWS  OF  THE  STATE  OP  NEW 
YORK 

Shares  $ each  Shares  $ each 

Number  Shares 

THE     UNION     CONTRACTING      COMPANY,      INCORPORATED 

Authorized  Capital  $ 

THIS   IS   TO   CERTIFY  THAT IS  the  Owner 

of shares  of  the  Capital  Stock  of  THE 

UNION  CONTRACTING  COMPANY,  INCORPORATED,  transferable 
only  on  the  books  of  the  Company,  by  the  holder  hereof 

[si 


in  person  or  by  duly  authorized  Attorney,  upon  surrender 

of  this  Certificate,  properly  endorsed. 

CORPORATE  WITNESS  the  Seal  of  the  Company  and  the 
signatures  of  its  duly  authorized  officers 
this day  of 19 


Treasurer  President 

Countersigned        Trust  Company 

Transfer  Agent 
By 

Registered  Trust  Company 

By .... 

Registrar 

It  will  be  noted  that  the  foregoing  certificate 
contains  the  following: 

Number  of  certificate 

Number  of  shares  represented 

Par  value  of  each  share 

Name  of  corporation 

State  under  which  incorporated 

Authorized  capital 

Name  of  stockholder 

Signature  of  corporate  officers 

Corporate  seal 

Signature  of  transfer  agent 

Signature  of  registrar 

Where  the  stock  has  been  paid  for  in  full  the 
certificate  usually  states  that  it  is  full  paid  and 
non-assessable.  Where  there  are  different 
classes  of  stock  the  certificate  usually  contains 
an  appropriate  reference  to  the  charter  provi- 
sions with  respect  to  the  preferences  existing 
in  favor  of  one  class  against  the  other. 

16] 


TRANSFERS  OF  STOCK 
Right  to  Transfer  Stock 

Shares  of  stock  in  a  corporation  are  personal 
property  and  it  is  well  settled  that  the  owner, 
as  in  the  case  of  other  personal  property,  has  an 
absolute  and  inherent  right  as  an  incident  of 
his  ownership  to  sell  and  transfer  the  same  at 
will,  except  insofar  as  the  right  may  be  restricted 
by  the  charter  of  the  corporation  or  by  a  valid 
by-law,  or  by  a  valid  agreement  between  him 
and  the  corporation,  provided  the  transfer  is  in 
good  faith  and  to  a  person  capable  of  assuming 
the  obligations  of  a  stockholder.  In  the  ab- 
sence of  such  restrictions  a  bona-fide  transfer 
does  not  require  the  consent  of  the  corporation 
and  cannot  be  prevented  by  it  or  by  its  officers. 
The  right  of  transfer  is  also  frequently  con- 
ferred in  express  terms  by  the  corporate  charter 
or  the  general  law  under  which  the  corporation 
is  formed  or  by  provisions  in  the  corporate  by- 
laws or  the  certificate  of  stock.  (Fletcher  on 
Private  Corporations,  p.  6257.) 

Steps  Involved  in  a  Transfer  of  Stock 

The  transfer  of  one  or  more  shares  of  stock 
generally  involves  the  following  steps: 

[7] 


The  certificate  is  assigned  by  the  transferrer 
to  the  transferee.  The  assigned  certificate  is 
transmitted  to  the  corporation  and  an  entry  is 
made  on  the  transfer  book  showing  the  ac- 
quisition of  the  stock  by  the  transferee  from  the 
transferrer.  The  corporation  then  issues  to  the 
transferee  a  new  certificate  which  evidences  the 
ownership  on  the  part  of  the  newly  recorded 
stockholder  of  the  stock  transferred.  Finally, 
the  corporation  cancels  the  old  certificate  of 
stock  and  posts  the  transfer  into  the  stock 
ledger.  (Cook  on  Corporations,  yth  Ed.,  p. 

US2-) 

Ways  in  Which  Stock  May  Be  Assigned 

Certificates  of  stock  may  be  assigned  in  two 
different  ways : 

(1)  By  a  formal  instrument  of  assignment 
signed  by  the  transferrer. 

This  instrument  of  assignment  may  be 
separate  from  the  certificate  of  stock  or  it  may 
be  printed  in  blank  on  the  back  of  the  certifi- 
cate. In  either  case  in  order  to  make  the  trans- 
fer complete  on  the  records  of  the  corporation 
it  is  necessary  for  the  transferrer  to  go  to  the 
office  of  the  corporation  and  sign  the  transfer  in 
the  corporate  transfer  book  whereby  the  trans- 
fer is  recorded. 

(2)  By  a  formal  instrument  of  assignment 
which  contains  a  power  of  attorney  author- 

[8] 


izing  a  person,  whose  name  is  usually  left 
blank  to  be  subsequently  filled  in,  to  sign  the 
corporate  transfer  book  and  thereby  record 
the  transfer. 

This  assignment  and  power  is  usually  found 
on  the  back  of  the  stock  certificate  but  may  be 
and  often  is  on  a  separate  form. 

The  second  method  is  the  one  usually  em- 
ployed for  the  reason  that  it  enables  the  registry 
of  the  transfer  on  the  corporate  records  without 
requiring  the  presence  of  the  transferrer. 

Form  of  Assignment 

The  following  is  one  of  the  usual  forms  of 
assignment  containing  a  power  of  attorney  to 
transfer  the  shares  on  the  books  of  the  corpo- 
ration: 

KNOW  ALL  MEN  BY  THESE  PRESENTS 
FOR  VALUE  RECEIVED 

have  bargained,  sold,  assigned,  and  transferred,  and  by 
these  presents  do  bargain,  sell,  assign,  and  transfer  unto. . . . 


Shares  of  the CAPITAL  STOCK  of  the 

standing  in name 

on  the  books  of  said 

represented  by  Certificate  No herewith,  and do 

hereby  constitute  and  appoint 

true  and  lawful  Attorney,  irrevocable  for and 

in ...  name  and  stead,  but  to use,  to  sell,  assign,  trans- 
fer, and  set  over,  all  or  any  part  of  the  said  stock,  and  for 
that  purpose  to  make  and  execute  all  necessary  acts  of 
assignment  and  transfer,  and  one  or  more  persons  to  sub- 
stitute with  like  full  power,  hereby  ratifying  and  confirming 

[9] 


all  that. .  .said  Attorney  or. .  .substitute  or  substitutes  shall 
lawfully  do  by  virtue  hereof. 

Dated 19 


In  Presence  of 


Various  Provisions  in  Powers  of  Assignment 

EFFECT  OF  WORDS  OF  CONVEYANCE 

The  first  clause  in  the  above  power  of  assign- 
ment contains  the  words  of  sale,  assignment,  and 
transfer  whereby  title  to  the  shares  of  stock  is 
conveyed  to  the  transferee  upon  proper  execu- 
tion of  the  power  by  the  transferrer.  Such  an 
assignment  estops  the  transferrer  from  claiming 
any  further  title  in  the  stock  as  against  the 
transferee.  And  this  is  the  law  even  though 
the  certificate  of  incorporation,  charter,  or  by- 
laws provides  that  a  transfer  shall  not  be  valid 
until  the  same  is  duly  registered  and  recorded 
on  the  books  of  the  corporation.  As  stated  in 
Cook  on  Corporations,  yth  Ed.,  p.  1160: 

"The  courts  construe  these  provisions  of  the 
certificate  or  by-laws  or  charter  to  be  in- 
tended, not  to  affect  the  rights  of  the  trans- 
feree against  the  transferrer,  but  to  affect  the 
rights  of  the  transferee  against  attaching 
creditors  of  his  transferrer  and  other  third 
parties  claiming  an  interest  in  the  stock,  and 
also  to  affect  his  right  to  claim  dividends, 
the  privilege  of  voting,  and  other  rights  of  a 
stockholder." 

[10] 


And  in  Fletcher  on  Private  Corporations,  p. 
6304,  it  is  said: 

"In  the  absence  of  express  charter  or  statu- 
tory provision  to  the  contrary,  shares  of  stock 
may  be  transferred  in  the  same  manner  as 
any  other  personal  property.  At  common 
law,  the  delivery  of  a  stock  certificate  with  a 
written  transfer  of  the  same  to  the  purchaser 
is  sufficient  to  transfer  the  title  to  the  shares 
represented  thereby,  and  this  is  now  the  rule 
in  many  states  by  statute." 

The  learned  author  further  says  on  p.  6316: 

"Where  a  particular  mode  of  transferring 
shares  of  stock  is  prescribed  by  the  charter 
of  the  corporation  or  general  law,  or  by  its 
by-laws,  compliance  therewith  may  be  neces- 
sary to  render  a  transfer  valid  as  against  the 
corporation.  But  the  fact  that  a  transfer 
of  shares  is  not  made  in  the  manner  prescribed 
by  the  charter,  general  law,  or  by-laws  of  the 
corporation  does  not  necessarily  render  it 
void  as  between  the  parties.  Ordinarily  a 
transfer  which  is  not  made  in  the  prescribed 
mode,  but  which  would  be  sufficient  at  com- 
mon law,  will  convey  at  least  an  equitable 
title  to  the  purchaser,  and  he  will  be  pro- 
tected therein  by  a  court  of  equity." 

The  Uniform  Stock  Transfer  Act  which  is  in 
force  in  Connecticut,  Illinois,  Louisiana,  Mary- 
land, Massachusetts,  Michigan,  New  Jersey, 

[n] 


New  York,  Ohio,  Pennsylvania,  Rhode  Island, 
Tennessee,  Wisconsin,  and  Alaska,  provides  in 
Section  I  thereof: 

"Title  to  a  certificate  and  to  the  shares 
represented  thereby  can  be  transferred  only, 

(a)  By    delivery  of  the   certificate  endorsed 
either  in  blank  or  to  a  specified  person  by  the 
person  appearing  by  the  certificate  to  be  the 
owner  of  the  shares  represented  thereby,  or 

(b)  By  delivery  of  the  certificate  and  a  sepa- 
rate document  containing  a  written  assign- 
ment of  the  certificate  or  a  power  of  attorney 
to  sell,  assign,  or  transfer  the  same  or  the 
shares   represented   thereby,    signed   by   the 
person  appearing  by  the  certificate  to  be  the 
owner   of  the    shares    represented    thereby. 
Such  assignment  or  power  of  attorney  may  be 
either  in  blank  or  to  a  specified  person.     The 
provisions  of  this  section  shall  be  applicable 
although  the  charter  or  articles  of  incorpora- 
tion or  code  of  regulations  or  by-laws  of  the 
corporation   issuing  the   certificate   and   the 
certificate  itself  provide  that  the  shares  rep- 
resented thereby  shall  be  transferable  only 
on  the  books  of  the  corporation  or  shall  be 
registered  by  a  registrar  or  transferred  by  a 
transfer  agent." 

THE  TRANSFEREE 

The  instrument  of  assignment  may  be  exe- 
cuted by  the  transferrer  with  the  name  of  the 
transferee  inserted  or  left  blank.  When  the 

[12] 


name  is  inserted  care  should  be  taken  that 
it  is  full  and  complete  and  in  no  way  inac- 
curate or  misleading.  For  example,  if  the 
transferee  is  an  individual  initials  should  be 
avoided  and  the  name  given  in  full.  The  use 
of  initials  lessens  materially  the  certainty  of 
identification. 

Then,  too,  the  name  should  not  be  in  the 
alternative.  It  would  be  obviously  improper  to 
assign  a  certificate  to  "John  Jones  or  James 
Smith.5'  The  owner  would  not  be  definite  or 
certain  and  the  corporation  would  not  know 
which  would  be  entitled  to  vote  the  stock  or 
receive  dividends  thereupon. 

In  transferring  into  the  name  of  a  married 
woman  her  own  Christian  name,  not  that  of 
her  husband  with  "Mrs."  prefixed,  should  be 
given. 

Example:  Mary  Ellen  Harris,  not 
Mrs.  William  H.  Harris. 

Prefixes  and  suffixes  such  as  Judge,  Major, 
Rev.,  Dr.,  M.  D.,  Ph.  D.,  etc.,  should  be 
avoided. 

If  the  ownership  of  the  transferee  is  in  any 
way  qualified  the  certificate  should  clearly 
describe  the  nature  and  character  of  such 
ownership.  Example:  William  Curtis,  Trustee 
under  the  Last  Will  and  Testament  of  Henry 
Parsons,  deceased. 

In  brief,  the  name  and  title  of  the  transferee 
should  be  full,  accurate,  and  complete,  as  well 
as  legally  correct,  and  should  clearly  show  the 
nature  and  character  of  the  ownership  and 

[13] 


whether  the  transferee  is  under  any  legal  dis- 
ability which  would  or  might  prevent  his  acting 
in  his  absolute  discretion  with  respect  to  the 
stock. 

NUMBER  OF   SHARES 

Following  the  name  of  the  transferee  the 
number  of  shares  should  be  inserted.  If  the 
assignment  is  to  cover  all  the  shares  represented 
by  the  certificate  the  word  all  may  properly 
be  inserted.  If  the  number  to  be  transferred 
is  less  than  the  number  so  represented  the 
transfer  office  should  be  advised  as  to  what 
disposition  is  to  be  made  of  the  remaining 
shares. 

POWER  OF  ATTORNEY 

As  has  been  seen  the  usual  form  of  assignment 
includes  a  power  of  attorney.  This  power  is 
customarily  left  blank  as  it  is  generally  im- 
practicable for  the  transferrer  himself  to  make 
the  transfer  on  the  books  of  the  corporation. 
Subsequently,  the  name  of  the  officer  or  em- 
ployee of  the  corporation  who  actually  records 
the  transfer  on  the  books  is  inserted. 

Generally  both  the  name  of  the  transferee 
and  that  of  the  attorney  are  left  blank.  Such 
a  certificate  may  be  transferred  from  hand  to 
hand  and  any  purchaser  thereof  may  fill  up  the 
blanks  and  insert  his  own  name.  He  may  also 
fill  in  his  own  name  as  transferee  and  the  name 
of  an  attorney  to  make  the  transfer  or  may  leave 
the  latter  blank  and  allow  the  clerk  making  the 


transfer  to  fill  in  his  name  as  is  generally  done. 
(Cook  on  Corporations,  yth  Ed.,  p.  1161.) 

The  death  of  the  transferrer  in  no  way  affects 
the  right  of  the  owner  of  the  certificate  to  fill 
in  the  blank  assignment  and  power  of  attorney. 

POWER  OF  SUBSTITUTION 

The  attorney  named  in  the  power  of  assign- 
ment is  given  "full  power  of  substitution  in  the 
premises."  If  the  name  of  the  attorney  is  filled 
in  before  the  certificate  is  presented  to  the  trans- 
fer office  it  should  be  accompanied  by  a  blank 
power  of  substitution  signed  by  the  attorney. 
This  power  of  substitution  should  be  substan- 
tially in  the  following  form: 

I  hereby  irrevocably  constitute  and  appoint 

my  substitute  to  trans- 
fer the  within  named  stock  under  the  foregoing  power  of 
attorney,  with  like  power  of  substitution. 

Dated 

Signed  and  acknowledged 

in  the  presence  of:  

The  above  power  of  substitution  when  signed 
in  blank  may  be  completed  at  the  transfer 
office  in  the  same  manner  as  the  blank  power  of 
assignment. 

DATE 

An  assignment  does  not  have  to  be  dated  to 
be  valid.  If  it  bears  a  date,  the  fact  that  the 
certificate  was  presented  long  after  such  date 
is  not  a  good  ground  for  questioning  the  assign- 


ment  or  holding  up  the  transfer.  If  the  date 
of  a  separate  power  of  assignment  is  prior  to 
the  date  on  which  the  certificate  was  issued,  the 
corporation  is  justified  in  rejecting  the  transfer 
on  the  ground  that  the  certificate  was  not  in 
existence  when  the  power  was  executed. 

SIGNATURE 

The  usual  notation  which  appears  at  the  foot 
of  the  power  of  assignment  is  as  follows : 

"The  signature  to  this  assignment  must 

correspond  with  the  name  as  written  on  the 

face  of  the  certificate  in  every  particular, 

without   alteration   or   enlargement   or   any 

charige  whatever/' 

This  is  a  reasonable  and  proper  requirement 
on  the  part  of  the  corporation. 

If  the  name  on  the  face  of  the  certificate  is 
Walter  F.  Jones  the  assignment  should  be  so 
endorsed  and  not  W.  F.  Jones.  If  the  certificate 
is  in  the  name  of  Walter  F.  Jones,  Trustee 
under  the  Will  of  James  Bradley,  deceased,  the 
assignment  should  be  signed  in  the  same  manner 
and  not  simply  Walter  F.  Jones. 

WITNESSES 

It  is  not  necessary  to  the  validity  and  suffi- 
ciency of  an  endorsement  that  the  signature  be 
witnessed.  In  some  cases,  however,  the  sign- 
ing of  a  certain  name  as  witness  is  accepted  as 
full  and  satisfactory  proof  of  the  identity  of  the 
person  signing  the  power  of  transfer. 

It  is  held  by  some  transfer  offices  that  where 

[16] 


a  cashier  of  a  bank  signs  his  name  as  witness 
and  also  gives  his  official  designation  this  is 
equivalent  to  a  guarantee  by  the  cashier's  bank 
of  the  signature  of  the  endorser,  and  so  also  is 
the  signature  as  witness  of  a  member  of  a  stock 
exchange  firm  regarded  as  tantamount  to  a 
guarantee  by  that  firm  of  the  signature  to  the 
assignment. 

There  may  be  circumstances  where  a  particu- 
lar name  as  witness  may  afford  complete  as- 
surance to  the  transfer  authorities  that  the 
endorsement  is  proper  in  every  respect.  On  the 
other  hand,  the  fact  that  the  signature  is  wit- 
nessed fails  in  many  cases  to  furnish  adequate 
verification.  No  general  rule  can  be  laid  down 
as  to  this.  The  transfer  office  will  seek  to 
satisfy  itself  that  the  person  signing  the  instru- 
ment is  the  one  who  rightly  and  properly  should 
do  so  and  the  proof  that  is  required  to  establish 
this  is  largely  dependent  upon  the  circumstances 
of  the  particular  case. 

GUARANTEE 

A  common  requirement  of  transfer  offices  in 
New  York  is  that  the  signature  of  the  trans- 
ferrer  be  guaranteed  by  a  firm  having  member- 
ship on  the  New  York  Stock  Exchange.  The 
guarantee  of  Stock  Exchange  firms  is  sought 
because  of  their  recognized  financial  responsi- 
bility. Often  certificates  are  sent  in  with  the 
signatures  guaranteed  by  a  bank  or  trust 
company.  This  latter  guarantee  has  fre- 
quently been  questioned  on  the  ground  that  the 

IfJSl 


charter  powers  of  such  banks  and  trust  com- 
panies do  not  give  the  power  to  make  these 
guarantees. 

NOTARIAL  ACKNOWLEDGMENTS 

It  is  the  regulation  of  many  transfer  agencies 
that  a  notarial  acknowledgment  of  the  signature 
will  be  accepted  in  lieu  of  a  guarantee  by  a 
firm  having  membership  on  the  New  York 
Stock  Exchange.  The  guarantee,  however,  is 
generally  regarded  as  furnishing  more  satisfac- 
tory protection. 

The  following  forms  of  notarial  acknowledg- 
ment have  been  prescribed  among  others  by  the 
Committee  on  Securities  of  the  New  York  Stock 
Exchange: 

ACKNOWLEDGMENT  BY  AN  INDIVIDUAL  BY  WHOM  AN 
ASSIGNMENT  OR  A  POWER  OF  SUBSTITUTION  IS  EXECUTED 

State  of { 

County  of $ss 

On  this day  of 19 before  me 

a  Notary  Public  for  the  County  of personally 

appeared to  me  known,  and  known  to 

me  to  be  the  individual  named  in  the  within  Certificate, 
and  described  in  and  who  executed  the  foregoing  Instru- 
ment and  acknowledged  to  me  that  he  executed  the  same 


Seal  

ACKNOWLEDGMENT  BY  A  FIRM 

State  of >ss 

County  of > 

On  this day  of 19 before  me 

a  Notary  Public  for  the  County  of per- 
sonally appeared to  me  known,  and 

[18] 


known  to  me  to  be  one  of  the  firm  of named 

in  the  within  Certificate,  and  described  in  and  who  executed 
the  foregoing  instrument,  and  acknowledged  to  me  that  he 
executed  the  same  as  the  act  and  deed  of  said  firm. 


Seal  

MISTAKES   IN  ISSUANCE   OF  CERTIFICATE 

Where  through  error  or  inadvertence  a  certi- 
ficate has  been  issued  in  the  wrong  name  the 
best  way  to  rectify  the  error  is  by  an  assign- 
ment from  the  erroneous  to  the  proper  trans- 
feree. If  the  erroneous  transferee  is  not  an 
actual  person  and  it  is  therefore  impossible  to 
secure  a  proper  assignment  of  the  new  certificate 
the  corporation  will  in  all  probability  agree  to 
cancel  the  new  certificate  and  issue  a  certificate 
in  proper  form  if  it  is  furnished  by  the  applicant 
with  adequate  indemnity  against  all  liability 
growing  out  of  the  re-issue  of  the  certificate. 


KINDS  OF  TRANSFERS 

Transfers  may  be  divided  into  the  following 
general  classes: 

By  Individuals, 
By  Tenants, 
By  Partnerships, 
By  Corporations, ' 
By  Fiduciaries. 

Transfers  by  Individuals 

The  simplest  form  of  transfer  is  that  where 
an  individual  owner  of  a  certificate  makes  an 
assignment  of  the  same.  Transfers  of  this  char- 
acter rarely  present  any  difficulties.  The  fol- 
lowing are  the  general  requirements  which  a 
corporation  usually  exacts  preliminary  to  such 
a  transfer: 

(a)  A  proper  endorsement  of  the  assign- 
ment by  the  transferred 

(b)  A  guarantee  of  signature  by  a  firm  hav- 
ing membership  on  the  New  York  Stock  Ex- 
change or  in  lieu  thereof  a  notarial  acknowl- 
edgment of  the  signature. 

(c)  One  or  more  witnesses  to  the  signature 
of  the  transferrer,  although  this  is  not  es- 
sential. 

(d)  Payment   of   the    proper    Federal    and 

[20] 


State  transfer  taxes  evidenced  by  the  affixing 
of  the  required  transfer  tax  stamps, 
(e)     The  full  name  and  address  of  the  trans- 
feree. 

MARRIED  WOMEN 

At  common  law  a  married  woman  was  in- 
capable of  making  any  binding  contracts.  This 
disability  has  been  removed  by  statute  but  in 
some  states  a  married  woman  cannot  contract 
with  her  husband  nor  can  she  act  as  surety  for 
him.  On  the  question  of  the  right  of  a  married 
woman  to  transfer  stock  the  statutes  of  the  state 
or  states  involved  should  be  consulted.  As 
respects  such  transfers  it  would  seem  that  the 
law  of  the  domicile  of  the  married  woman  would 
govern  the  respective  rights  of  the  parties  to  the 
transfer  but  that  the  duty  of  the  corporation  in 
connection  with  the  transfer  would  be  deter- 
mined by  the  law  of  the  state  in  which  the 
corporation  was  organized.  (Cook  on  Corpora- 
tions, yth  Ed.,  pp.  62,  954.) 

It  has  been  held  that  although  by  the  law  of  a 
state  a  sale  of  stock  by  a  married  woman  to  her 
husband  without  an  order  of  court  is  void, 
nevertheless  a  corporation  which  transfers 
stock  on  its  books  pursuant  to  such  a  sale  can- 
not be  held  accountable  to  her  therefor  unless, 
at  the  time  it  made  the  transfer  or  before  the 
stock  got  in  the  hands  of  an  innocent  purchaser, 
it  had  notice  of  the  marital  relation  existing 
between  the  parties.  (Fletcher  on  Private  Cor- 
porations, p.  6436.) 

[21] 


INFANTS   AND   OTHER  PERSONS   UNDER 
LEGAL  DISABILITY 

The  rule  has  been  laid  down  that  a  corpora- 
tion is  liable  if  it  recognizes  a  power  of  attorney 
to  transfer  shares  executed  by  a  person  under 
legal  disability,  as  an  infant  or  insane  person,  and 
allows  a  transfer  to  be  made  under  such  power  on 
its  books. 

If,  however,  an  infant  sells  his  stock  and 
executes  a  power  of  transfer  and  under  the  law 
the  sale  is  not  void  but  voidable,  the  corpora- 
tion is  in  duty  bound  to  register  the  transfer 
provided  it  has  not  been  avoided  by  the  infant 
at  the  date  of  the  application  for  registration. 

It  is  provided  in  the  Uniform  Stock  Transfer 
Act  that  nothing  therein  "shall  be  construed  as 
enlarging  the  powers  of  an  infant  or  other  person 
lacking  full  legal  capacity  ...  to  make  a 
valid  endorsement,  assignment,  or  power  of 
attorney."  (Fletcher  on  Private  Corporations, 
p.  6436.) 

ATTORNEYS    IN   FACT 

An  attorney  has  been  defined  as  "one  who  acts 
for  another  by  virtue  of  an  appointment  by  the 
latter."  (I  Bouv.  Law  Diet.,  8th  Ed.,  p.  282.) 

The  term  attorney  in  fact  is  employed  to  desig- 
nate "persons  who  act  under  a  special  agency, 
or  a  special  letter  of  attorney  so  that  they  are 
appointed  in  factum,  for  the  deed,  or  special  act 
to  be  performed;  but  in  a  more  extended  sense 
it  includes  all  other  agents  employed  in  any 
[22] 


business  or  to  do  any  act  or  acts  in  pals  for 
another."  (Story,  Agency,  Sec.  25.) 

A  corporation  when  presented  with  an  as- 
signment executed  on  behalf  of  the  registered 
owner  by  an  attorney  in  fact  will  require  that 
it  be  furnished  with  satisfactory  proof  that  the 
attorney  is  acting  under  a  valid  designation 
of  authority.  The  corporation  in  its  discretion 
may  see  fit  to  request  the  production  of  the 
original  power  under  which  the  attorney  in  fact 
essays  to  act  or  it  may  be  content  with  a  certi- 
fied copy  thereof.  An  examination  of  the  in- 
strument will  disclose  whether  it  clothes  the 
attorney  with  authority  to  execute  the  assign- 
ment. The  corporation  will  also  call  for  the 
customary  proof  as  to  the  authenticity  of  the 
attorney's  signature,  i.  e.,  a  guarantee  of  the 
signature  by  a  New  York  Stock  Exchange 
firm  or  a  notarial  acknowledgment  of  the  sig- 
nature. 

If  the  power  of  attorney  is  presented  a  con- 
siderable length  of  time  after  the  date  of  its 
execution,  the  corporation  will  require  that  it 
be  furnished  with  satisfactory  evidence  that  the 
power  continues  in  full  force  and  effect.  Some 
offices  are  disposed  to  question  a  power  that  is 
more  than  six  months  old  while  in  others  no  ex- 
ception is  taken  unless  the  power  is  more  than 
a  year  old. 

ASSIGNEE    OR  TRUSTEE    IN    BANKRUPTCY 

One  who  has  made  an  assignment  for  the 
benefit  of  creditors  or  whose  affairs  are  in 

[23] 


bankruptcy  is  divested  of  all  control  over  his 
property  and  thereafter  an  assignment  by  him 
of  stock  registered  in  his  name  will  not  be  recog- 
nized. To  effect  a  transfer  a  power  executed 
by  the  assignee  or  trustee  in  bankruptcy  will 
be  required  as  well  as  a  certified  copy  of  the  order 
of  appointment  of  the  assignee  or  trustee  so  that 
the  corporation  may  be  assured  that  the  person 
making  the  transfer  has  the  requisite  authority. 
In  addition,  the  customary  proof  as  to  the 
authenticity  of  the  signature  will  be  called 
for. 

Transfers  by  Tenants 

"A  joint  tenancy  exists  when  a  single  estate 
in  property,  real  or  personal,  is  owned  by  two 
or  more  persons,  other  than  husband  and  wife, 
under  one  instrument  or  act  of  the  parties." 
(23  Ore.  4%.) 

A  tenancy  in  common  is  where  two  or 
more  persons  hold  undivided  interests  in  prop- 
erty, real  or  personal,  under  separate  instru- 
ments, or  under  an  instrument  which  shows 
an  intent  that  each  shall  hold  his  interest 
as  a  separate  and  individual  one."  (Huffcut's 
Elements  of  Business  Law,  p.  268.) 

"The  essential  difference  between  joint  ten- 
ants and  tenants  in  common  is  that  joint  ten- 
ants hold  the  property  by  one  joint  title  and 
in  one  right,  whereas  tenants  in  common  hold 
by  several  titles  or  by  one  title  and  several 
rights/'  (23  Cyc.  484.) 

[24] 


Another  difference  is  that  when  one  of  the 
joint  tenants  dies  the  survivors  take  his  share 
to  the  exclusion  of  his  heirs  or  devisees.  If  one 
of  the  tenants  in  common  dies  his  interest  is  a 
part  of  his  separate  estate. 

It  is  now  generally  provided  by  statute  that 
all  conveyances  to  two  or  more  persons  shall 
be  deemed  to  create  tenancies  in  common  unless 
otherwise  expressed. 

If,  therefore,  it  is  desired  to  transfer  stock 
into  the  name  of  two  or  more  individuals  as 
joint  tenants  the  assignment  should  be  in  favor 
of  "John  Brown  and  Henry  White,  as  joint 


tenants." 


A  transfer  out  of  the  names  of  joint  tenants 
or  tenants  in  common  should  be  endorsed  by 
all  who  are  named  on  the  face  of  the  certificate, 
except  that  where  a  joint  tenant  has  died  an 
endorsement  by  the  survivors  is  sufficient. 

Transfers  by  Partnerships 

"A  general  partnership  is  a  voluntary  asso- 
ciation of  two  or  more  persons  under  an  agree- 
ment to  carry  on  in  common,  as  if  they  were 
one  person  or  an  entity,  a  business  or  occu- 
pation, and  to  share  as  common  owners  the 
profits  of  the  enterprise."  (Huffcut's  Ele- 
ments of  Business  Law,  p.  236.) 

Stock  Exchange  houses  are  usually  partner- 
ships and  accordingly  a  large  proportion  of  the 

[251 


transfers  made  on  the  books  of  a  corporation 
are  in  or  out  of  the  name  of  some  firm. 

In  the  conduct  of  the  business  of  the  partner- 
ship each  partner  is  an  agent  for  his  co-partners. 
Stock  certificates  may  be  endorsed  on  behalf  of 
the  firm  by  any  of  the  general  partners. 

If  stock  is  to  be  transferred  out  of  the  firm 
name  into  the  name  of  one  of  the  partners 
individually  it  is  advisable  that  some  partner 
other  than  the  transferee  endorse  the  power  in 
the  name  of  the  firm. 

The  assignment  by  a  partner  to  his  wife  of  stock 
standing  in  the  name  of  the  firm  would  doubt- 
less be  questioned  and  proof  required  in  order 
to  establish  the  propriety  of  the  transaction. 

Transfers  by  Corporations 

The  management  of  a  corporation  is  vested  in 
its  board  of  directors.  Pursuant  to  the  au- 
thority granted  by  the  by-laws  the  corporate 
officers  are  appointed  by  the  board  of  directors. 
The  powers  of  the  officers  are  usually  defined  in 
the  by-laws  but  if  not  the  directors  may  pre- 
scribe them. 

Certificates  of  stock  standing  in  the  name  of 
a  corporation  in  order  to  be  transferred  must  be 
assigned  by  a  duly-authorized  officer  of  the  cor- 
poration. The  by-laws  may  vest  in  certain 
officers  the  power  to  assign  and  convey  securities 
of  the  corporation.  If  the  by-laws  are  silent 
as  to  this  such  authority  may  be  granted  by  the 
board  of  directors.  It  may  apply  generally 

[26] 


to  all  transfers  or  only  to  securities  specifically 
designated. 

In  support  of  a  transfer  of  stock  out  of  the 
name  of  a  corporation  the  transfer  office  will 
ask  that  it  be  furnished  with  a  certified  copy 
of  the  by-laws  of  the  corporation  evidencing  the 
authority  of  the  particular  officers  to  make  the 
transfer  in  question ;  also  a  certificate  of  the  sec- 
retary or  other  satisfactory  proof  that  the  person 
signing  the  power  was  duly  elected  to  the  office  of 
president,  let  us  say,  of  the  corporation  and  now 

/holds  that  office. 

^*~~  If  this  power  is  not  conferred  oy  the  oy-laws 
on  any  particular  officer  then  a  certified  copy 
of  the  resolutions  of  the  board  granting  this 
authority  should  be  supplied.  The  certifica- 
tion should  be  somewhat  in  the  following  form : 

I,  John  Wilson,  Secretary  of  Blank  Corpo- 
ration do  hereby  certify  that  the  foregoing 
preamble  and  resolution  was  adopted  by  the 
Board  of  Directors  of  the  corporation  at  a 
meeting  duly  called  and  held  pursuant  to  the 
by-laws  of  the  corporation  at  the  principal 
office  of  the  corporation  in  the  City  of  New 
York,  on  the  loth  day  of  June,  1920,  at  which 
a  quorum  was  present. 


Secretary. 
Dated  June  12,  1920. 

The  certification  of  the  by-laws  or  of  the 
minutes  of  the  board  should  be  by  an  officer 
other  than  the  one  executing  the  assignment. 

[271 


MEMBERSHIP   CORPORATIONS   AND   UNINCOR- 
PORATED ASSOCIATIONS 

Educational,  charitable,  fraternal,  and  relig- 
ious organizations  and  social  clubs  may  be  in- 
corporated or  unincorporated  associations.  In 
either  event  before  transferring  securities  out 
of  the  name  of  such  an  association  the  transfer 
agent  will  doubtless  call  for  a  certified  copy  of 
the  by-laws  of  the  organization  or  of  any  other 
record  or  proof  which  will  show  in  whom  the 
management  thereof  is  placed,  so  that  it  may  be 
determined  whether  the  power  of  transfer  is 
signed  by  a  properly  constituted  and  duly- 
Authorized  official  of  the  organization. 

Fiduciaries 

A  fiduciary  is  one  who  stands  in  an  "especial 
relation  of  trust  or  confidence  with  respect  to 
the  property  of  another.  Fiduciaries  may  be 
divided  into  the  following  classes:  Executors, 
Administrators,  Trustees,  and  Guardians. 

Transfers  by  Executors 

^  An  executor  is"  one  to  whom  another  man  com- 
mits by  his  last  will  the  execution  of  that  will 
and  testament."  (iBouv.  Law  Diet.,  p.  1134.) 

Upon  the  admission  to  probate  of  the  will  of  a 
decedent  letters  testamentary  are  issued  to  the 
executor  named  in  and  qualifying  under  the  will. 

Letters  testamentary  may  therefore  be  de- 
fined as  "the  tangible  written  authorization 
to  an  executor,  duly  tested,  signed  by  an  officer 

[28] 


and  under  seal  of  the  court."    (Jessup-Redfield's 
Surrogates'  Courts,  p.  561.) 

Any  one  of  the  following  persons  under  the 
law  of  New  York  may  offer  a  will  for  probate: 

(1)  A  person  designated  in  the  will  as  exe- 
cutor, devisee,  legatee,  testamentary  trustee, 
or  guardian. 

(2)  Any  person  interested  m  the  estate. 

(3)  Any  creditor  of  the  decedent. 

(4)  Any  party  to  an  action  in  which  the 
decedent,  if  living,  would  be  a  proper  party. 

The  validity  and  effect  of  wills  in  so  far  as  the 
disposition  of  personal  property  is  concerned  is 
governed  by  the  law  of  the  testator's  domicile 
at  the  time  of  his  death,  and  as  respects  the 
disposition  of  real  estate  or  the  creation  of  any 
interest  therein,  by  the  law  of  the  place  where 
the  property  is  situated.  (40  Cyc.  1383.) 

The  personal  property  of  a  decedent  vests 
immediately  in  the  executor  or  administrator  for 
the  purposes  of  his  trust  while  real  estate  passes 
directly  to  the  heir  or  devisee,  subject  to  such 
personal  exceptions  as  may  be  created  by  the 
will.  Title  to  the  real  estate  may  thereafter  be 
divested  for  the  purpose  of  applying  the  same 
to  meet  legal  obligations  of  the  estate  when  the 
personal  estate  is  insufficient  to  satisfy  all  lia- 
bilities. 

Notwithstanding  the  fact  that  many  corpora- 
tions derive  their  profits  in  a  certain  sense  from 
the  use  of  real  estate,  stock  is  held  to  be  personal 
property  and  goes  to  the  executors  or  adminis- 

[29] 


trators  to  be  applied  and  distributed  as  a  part 
of  the  assets  of  the  estate. 

As  illustrating  the  general  requirements  of 
transfer  offices  when  stock  belonging  to  the 
estate  of  a  decedent  is  presented  for  transfer 
out  of  the  name  of  said  decedent,  let  us  assume 
that  John  Smith,  a  resident  of  Philadelphia, 
is  the  registered  owner  of  a  certificate  for  100 
shares  of  the  common  stock  of  X  Railway  Com- 
pany, a  corporation  organized  and  existing  under 
the  laws  of  the  State  of  Missouri.  The  said 
John  Smith  dies  leaving  a  last  will  and  testa- 
ment which  is  admitted  to  probate  in  the 
Orphans  Court  of  Philadelphia  County  and 
letters  testamentary  thereunder  are  issued  to 
one  George  Brown.  The  executor  in  order  to 
pay  certain  debts  of  the  decedent  desires  to  sell 
this  stock  and  it  is  therefore  forwarded  to  a 
brokerage  firm  in  New  York  City,  where  the 
Railway  Company  has  a  transfer  office  for  the 
convenience  of  its  security  holders,  with  the 
request  that  it  sell  the  same  for  and  on  account 
of  the  estate.  The  firm  of  brokers  effects  a  sale 
of  the  stock  and  the  next  step  is  the  transfer  of 
the  certificate  into  the  name  of  the  purchaser 
or  his  nominee  on  the  books  of  the  Railway 
Company.  The  usual  documents  and  proofs 
which  the  Railway  Company  would  require  be- 
fore making  this  transfer  are  the  following: 

Vi)  An  officially  certified  copy  of  the  last 
will  and  testament  and  of  all  codicils  thereto 
of  the  decedent. 

[30] 


(2)  An  officially  certified  copy  of  the  de- 
cree or  a  probate  certificate  of  recent  date 
evidencing   the   appointment   and   qualifica- 
tion of  the  executor  or  executors,  and  that 
such    appointment    remains   unrevoked.     In 
New  York  these  probate  certificates  are  some- 
times called  surrogate's  certificates. 

(3)  Stock  certificate  properly  assigned  by 
George  Brown   "as  Executor  of  the  Estate 
of  John   Smith,   deceased,"   with   signature 
guaranteed  by  a  firm  having  membership  on 
the  New  York  Stock  Exchange,  or  a  notarial 
acknowledgment  of  the  signature  in  lieu  of 
said  guarantee. 

(4)  Waiver   of  the   Comptroller   of  the 
State  of  New  York  consenting  to  the  transfer 
under  the  Inheritance  Tax  laws  of  said  state. 

(5)  Waiver  of  the  proper  authority  of  the 
State  of  Missouri  consenting  to  the  transfer 
under  the  Inheritance  Tax  laws  of  said  state. 

(6)  New  York  State  and  Federal  Transfer 
Tax  stamps  in  the  proper  amounts. 

It  is  believed  that  no  waiver  under  the  In- 
heritance Tax  laws  of  Pennsylvania  would  be 
required  in  this  case. 

x  In  certain  states  executors  have  no  power 
to  sell  without  an  order  of  court.  Where  this  is 
the  case  a  certified  copy  of  an  order  of  the 
probate  court  in  which  the  estate  of  the  de- 
cedent is  being  administered  authorizing  the 
sale  of  the  stock  will  also  be  required. 

If  under  a  statute  a  court  order  is  necessary 

[31] 


to  authorize  asale  of  stock,  it  is  the  duty  of  the 
corporation,  if  it  desires  to  protect  itself  against 
possible  liability,  to  know  that  the  order  has 
been  complied  with. 

\  The  case  of  Citizens'  Street  Railway  Company 
vs.  Robbins,  128  Ind.  449,  26  N.  E.  116,  shows 
that  it  is  not  enough  that  the  order  has  been 
issued.  That  case  involved  a  statute  of  Indiana 
which  required  an  administrator  to  sell  personal 
property,  including  corporate  stock,  at  public 
sale,  or  if  at  private  sale,  under  order  of  court. 
An  administratrix  was  required  by  order  of 
court  to  take  security  for  the  purchase  price 
of  stock  in  the  Citizens'  Street  Railway  Com- 
pany. She  took  the  individual  note  of  the 
purchaser  without  security.  The  sale  was  on  a 
credit  of  ten  years  although  the  administratrix 
had  no  power  to  give  more  than  a  twelve 
months'  credit.  No  return  of  the  sale  was 
made  to  the  court  or  entered  on  its  records. 
When  the  shares  were  presented  for  transfer 
the  company  examined  the  order  authorizing 
the  sale  but  did  not  ascertain  whether  or  not 
the  sale  was  made  in  accordance  with  the  order. 
The  company  was  held  liable  to  the  estate  for 
the  loss  occasioned  by  its  lack  of  diligence. 

By  the  laws  of  some  states  a  distribution 
within  a  fixed  period  is  forbidden.  Where 
such  a  law  is  applicable  a  corporation  will  not 
make  a  transfer  in  distribution  before  the 
statutory  period  has  expired,  unless  it  is  fur- 
nished with  proof  that  all  debts  of  the  estate 
have  either  been  paid  or  provided  for. 


If  there  is  no  such  statute,  or  if  the  courts 
have  construed  the  provision  as  being  intended 
solely  for  the  protection  of  the  executor,  then 
the  corporation  is  not  bound  to,  and  usually  will 
not,  inquire  as  to  the  payment  of  or  provision 
for  claims  against  the  decedent's  estate. 

If  stock  of  an  estate  is  sought  to  be  trans- 
ferred into  the  name  of  an  executor  individually, 
the  transfer  agent  will  ascertain  whether  the 
executor  is  a  legatee  under  the  will,  and  if  so 
will  make  the  transfer  upon  proof  in  the  form 
of  an  affidavit  on  the  part  of  some  one  having 
knowledge  of  the  facts  (the  attorney  represent- 
ing the  estate,  for  example)  showing  that  all 
debts  of  the  estate  and  also  the  other  legacies 
have  either  been  paid  or  provided  for. 

Where  the  executor  is  not  having  the  transfer 
made  to  himself  as  legatee,  but  as  a  result  of  a 
sale  to  himself  individually,  the  corporation 
cannot  with  safety  make  the  transfer  unless  it  is 
clearly  established  that  the  transaction  is  a  fair 
and  equitable  one.  As  is  said  in  18  Cyc.  287: 

"An  executor  or  administrator  cannot  be 
allowed  to  acquire  individual  interests  in- 
consistent with  the  representative  capacity 
he  sustains  for  the  benefit  of  the  estate,  nor 
to  make  a  personal  profit  out  of  his  dealings 
with  the  property  of  the  estate,  and  trans- 
actions in  which  the  representative  as  an 
individual  deals  with  himself  in  his  represen- 
tative capacity  are  always  regarded  with 
suspicion  and  will  be  set  aside  if  inequitable." 

[33] 


There  are  times  when  corporations  see  fit  to 
question  an  executor's  power  of  sale  because  of 
the  lapse  of  time  since  the  executor's  appoint- 
ment. If  the  will  does  not  either  expressly  or 
by  implication  confer  upon  the  executor  the 
power  or  function  of  a  trustee,  his  power  of 
sale  ought  not  to  be  questioned  whatever  the 
lapse  of  time  since  his  appointment.  It  is  the 
duty  of  an  executor  to  sell  estate  stock  and  wind 
up  the  estate.  Therefore  all  that  appears  to  the 
corporation  is  that  the  executor  is  doing  his 
duty,  although  tardily,  and  the  delay  is  no  rea- 
son for  the  corporation  preventing  the  executor 
from  performing  his  duty. 

Frequently  the  executor  is  also  trustee,  and 
in  such  cases  he  is  generally  so  styled.  How- 
ever the  function  of  trustee,  as  distinguished 
from  the  ordinary  function  of  executor,  may 
arise  by  virtue  of  any  provision  which  requires 
the  executor  to  retain  the  estate  or  a  part  thereof 
in  his  hands  for  the  purpose  of  accumulating 
or  applying  income.  In  all  such  cases  the  cor- 
poration will  desire  information  as  to  the 
capacity  in  which  he  is  acting,  provided  more 
than  a  reasonable  time,  say  eighteen  months, 
has  elapsed  since  the  issue  of  letters  testamen- 
tary. 

Where  the  two  functions  of  executor  and 
trustee  are  invested  in  the  same  person,  a  formal 
accounting  or  transfer  from  the  executor  as 
such,  to  himself  as  trustee,  is  not  essential  to 
terminate  the  powers  and  functions  of  the 
executor  and  reveal  those  of  the  trustee.  When 

[34] 


the  purpose  for  which  the  peculiar  powers  of  an 
executor  are  conferred  by  law  has  been  accom- 
plished, those  powers  cease  and  the  powers  and 
functions  of  a  trustee  appear.  If  after  the  lapse 
of  time  ordinarily  adequate  for  the  settlement 
of  an  estate,  an  executor  seeks  to  exercise  the 
powers  of  an  executor  as  distinguished  from 
those  of  a  trustee,  persons  dealing  with  him 
are  put  on  inquiry  to  ascertain  that  the  facts 
and  his  purpose  justify  a  continuance  of  the 
exercise  of  such  powers.  Before  the  lapse  of 
such  time  it  may  ordinarily  be  presumed  that 
he  is  acting  in  the  ordinary  course  of  administra- 
tion and  settlement  of  the  estate,  and  is  entitled 
to  exercise  the  powers  of  an  executor. 

We  have  seen  that  a  corporation  in  connection 
with  the  transfers  of  stock  standing  in  the  name 
of  the  decedent  will  call  for  certified  copy  of 
the  will  and  a  certificate  showing  its  probate 
and  the  granting  of  letters  testamentary  to  the 
executor,  and  that  the  appointment  is  in  full 
force  and  effect.  The  reasonableness  of  these 
requirements  is  obvious.  The  will  may  contain 
an  express  disposition  of  the  stock.  It  may 
create  trusts  whereby  the  corporation  will  be 
under  a  duty  to  inquire  whether  the  stock  is 
held  by  the  executors  or  by  trustees  under  the 
will.  It  is  not  necessary,  however,  that  a  certi- 
fied copy  of  the  will  be  lodged  permanently  with 
the  corporation.  It  would  seem  to  be  enough 
to  exhibit  a  certified  copy  and  leave  a  plain 
copy  for  filing  with  the  other  documents  con- 
stituting the  record  of  the  transfer.  Some 

[35] 


corporations,  however,  request  that  a  certified 
copy  be  permanently  lodged  with  them. 

Transfers  by  Administrators 

Is* 

An  administrator  is  a  person  appointed  by  the 

Surrogate's  or  Probate  Court  to  administer  the 
affairs  and  to  manage  and  distribute  the  estate 
of  a  decedent  who  has  not  disposed  of  his  estate 
by  a  valid  will,  or  who  has  failed  to  name  an 
executor,  or  whose  executor  for  any  reason  fails 
to  act.  The  court  has  power  to  designate  a 
temporary  administrator  to  take  charge  of  the 
estate  pending  the  appointment  of  the  per- 
manent administrator. 

Where  a  testator  has  neglected  to  name  an 
executor,  or  where  the  executor  for  any  reason 
fails  to  act,  the  court  will  appoint  a  permanent 
administrator  who  is  termed  administrator  cum 
testamento  annexe — administrator  with  the  will 
annexed. 

Where  the  administrator  has  begun  the  work 
of  administration,  but  for  any  reason  fails  to 
continue  the  same,  the  court  will  appoint  a 
successor  who  is  termed  an  administrator  de 
bonis  non — administrator  of  the  goods  not  yet 
administered. 

Where  an  executor  has  begun  the  work  of 
administration  but  fails  to  complete  the  same, 
his  successor  appointed  by  the  court  is  termed 
an  administrator  cum  testamento  annexo  de  bonis 
non — administrator  with  the  will  annexed  of  the 
goods  not  yet  administered. 

[36] 


By  letters  of  administration  is  meant  the 
certificate  of  authority  which  evidences  the  ap- 
pointment and  qualification  of  an  administrator. 

The  usual  documents  which  are  required  to  be 
submitted  to  the  transfer  agent  before  a  trans- 
fer for  purposes  of  sale  of  stock  standing  in  the 
name  of  a  decedent  will  be  made  upon  the  en- 
dorsement of  an  administrator,  are  as  follows : 

(1)  An    officially    certified    copy    of   the 
decree  evidencing  the  appointment  and  quali- 
fication of  the  administrator,  and  that  such 
appointment  remains  unrevoked.     If  the  rep- 
resentative is   appointed  administrator  cum 
testamento    annexo,    an    officially    certified 
copy  of  the  will  and  of  any  codicils  should 
also  be  furnished. 

(2)  Stock  certificate  properly  assigned  by 
the    transferrer    "as    administrator    of   the 
estate  of  John  Smith,  deceased/'  with  signa- 
ture guaranteed  by  a  firm  having  membership 
on  the  New  York  Stock  Exchange  or  a  notar- 
ial acknowledgment  of  signature  in  lieu  of  said 
guarantee. 

(3)  Waivers  of  the  proper  authorities  con- 
senting to  the  transfer  under  the  Inheritance 
Tax   laws   of  the   various   states   concerned 
(See  Transfers  by  Executors,  supra). 

(4)  State     and     Federal    Transfer    Tax 
.stamps  in  the  proper  amounts. 

The  requirements  exacted  in  the  case  of  a 
transfer  by  an  administrator  for  purposes  of 

[37] 


distribution,  and  also  in  the  case  of  a  transfer 
to  an  administrator  individually,  are  similar 
to  those  which  are  called  for  in  respect  of  trans- 
fers by  executors  under  like  circumstances  and 
which  have  already  been  discussed. 

Transfers  by  Trustees 

'  ~  A  trustee  is  "a  person  in  whom  some  estate, 
interest,  or  power  in  or  affecting  property  of  any 
description  is  vested  for  the  benefit  of  another, 
or  one  to  whom  the  property  has  been  conveyed 
to  be  held  or  managed  for  another."  (3  Bouv. 
Law  Diet.,  p.  3334.) 

-A  trustee  may  be  appointed  (i)  by  a  written 
agreement  or  indenture  of  trust,  or  (2)  by  a 
testator  in  his  last  will  and  testament.  In 
the  latter  case  he  is  termed  a  testamentary 
trustee. 

An  agreement  or  indenture  of  trust  not  only 
designates  the  trustee,  but  defines  the  powers 
and  duties  of  the  trustee,  in  the  matter  of  the 
administration  of  the  trust  for  which  he  is  ap- 
pointed. It  usually  provides  also  for  the  ap- 
pointment of  a  successor  trustee  in  the  event 
that  the  trustee  named  dies,  renounces  the  trust, 
fails  to  qualify,  resigns,  or  is  removed. 

Generally,  under  the  probate  laws  of  the 
various  states,  a  testamentary  trustee  is  con- 
firmed by  the  action  of  the  court  in  admitting 
the  will  to  probate.  It  frequently  happens  that 
in  the  will  an  individual  or  trust  company  is 
named  as  executor  and  trustee.  Should  the  per- 

[38] 


son  or  corporation  so  designated  fail  to  qualify 
for  any  reason,  and  the  will  contain  no  clause 
providing  for  a  successor,  the  court  nevertheless 
may  appoint  a  successor  trustee. 
~  Transfers  of  corporate  stock  by  testamentary 
trustees  may  be  classified  as  follows : 

(1)  Transfers    made    necessary    by    the 
death,  resignation,  or  removal  of  one  or  more 
trustees. 

(2)  Transfers  for  purposes  of  sale. 

(3)  Transfers  for  purposes  of  distribution. 

TRANSFERS    UPON   DEATH,   RESIGNATION,   OR 
REMOVAL   OF   TRUSTEE 

If  it  is  provided  in  the  will  that  the  trusts 
created  shall  be  administered  by  not  less 
than  two  trustees  and  one  trustee  dies  or  re- 
signs, the  court  on  application  of  the  other  will 
appoint  a  trustee  to  fill  the  vacancy.  The 
next  step  is  to  have  the  stock  held  under  the 
trust  transferred  out  of  the  names  of  the  old 
trustees  and  into  the  new.  An  assignment 
executed  by  the  applicant  as  trustee  will  be 
sufficient  to  accomplish  this. 

If,  however,  both  of  the  former  trustees  have 
died  or  resigned  and  it  is  impossible  to  secure  an 
assignment  by  either,  it  would  seem  that  the 
corporation  would  make  the  transfer  upon 
receipt  of  a  certificate  evidencing  the  appoint- 
ment of  the  successor  trustees,  which  certificate 
will  usually  show  that  they  were  appointed  in 
the  place  and  stead  of  the  former  trustees. 

l39l 


TRANSFERS  FOR  PURPOSES  OF  SALE 

A  trustee  presenting  stock  for  transfer  for  pur- 
poses of  sale  will  be  asked  to  submit  a  certified 
copy  of  the  will  under  which  he  is  acting  as  well  as 
a  certificate  evidencing  his  appointment.  The 
will  is  required  in  order  that  the  corporation  may 
ascertain  whether  the  power  to  sell  is  expressly 
given  or  arises  by  implication.  If  the  instrument 
does  not  confer  this  power,  it  will  be  necessary 
to  secure  an  order  of  court  authorizing  the  sale 
of  the  securities  in  question. 

A  trustee  who  has  express  power  to  invest 
may  not  sell  stock  under  such  power  unless 
by  reason  of  certain  provisions  in  the  will  or 
certain  special  circumstances  a  power  of  sale  is 
implied.  It  is  well  settled  that  the  power  to 
invest  does  not  of  itself  carry  with  it  a  power 
of  sale  express  or  implied. 

Where  the  instrument  creating  the  trust 
specifies  certain  securities  as  constituting  the 
trust  estate  and  the  trustee  is  given  the  power 
to  invest,  this  could  probably  be  construed  as  an 
implied  power  to  sell  the  securities  once  and  to 
invest  the  proceeds.  Any  other  construction 
would  render  the  power  to  invest  meaningless. 
It  would  seem  that  a  single  exercise  of  the  power 
would  in  this  case  exhaust  it. 

Where  a  trustee  is  given  the  power  to  invest  and 
re-invest  he  may  sell  stock  held  in  the  trust  estate 
for  the  reason  that  it  would  be  impossible  to  exer- 
cise this  power  of  investment  and  re-investment 
without  converting  the  securities  into  cash. 

[40] 


A  trustee  who  is  given  a  general  power  "to 
manage"  the  trust  fund  or  "to  manage  and 
control"  the  same  has  an  implied  power  to  sell 
securities  belonging  to  the  estate. 

When  a  trustee  has  made  an  unauthorized  in- 
vestment in  stock,  the  corporation  should  allow 
a  transfer  on  the  theory  that  the  trustee  has  an 
implied  power  of  sale  under  such  circumstances 
in  order  that  the  securities  may  be  converted 
into  cash  and  a  proper  investment  made. 

In  the  case  of  a  testamentary  trust  for  the 
benefit  of  a  life  tenant  with  power  of  appoint- 
ment over,  the  corporation  will  desire  evidence 
showing  whether  the  life  tenant  is  living  and 
whether  the  shares  are  being  sold  by  the  trustee 
for  re-investment  under  the  trust.  If  it  appear 
that  the  transfer  is  in  distribution,  the  question 
of  inheritance  taxes  will  have  to  be  considered 
and  proper  waivers  obtained. 

Transfer  offices  are  in  many  instances  inclined 
to  question  a  transfer  from  a  banking  firm  to  a 
trustee  where  the  power  is  signed  by  the  member 
of  the  firm  in  his  favor  as  trustee.  No  objec- 
tion is  made,  however,  to  a  transfer  from  a 
trustee  to  a  banking  firm  of  which  the  trustee  is 
a  member  where  the  trustee  has  power  of  sale, 
the  transfer  being  accepted  on  the  assumption 
that  it  is  made  to  effect  a  bona  fide  sale. 

For  the  protection  of  a  corporation  in  allowing 
stock  held  in  trust  to  be  transferred  to  the 
trustee  individually,  an  order  of  the  court  hav- 
ing jurisdiction  of  the  trust  authorizing  the 
sale  or  transfer  should  be  obtained. 


TRANSFERS    FOR  PURPOSES   OF  DISTRIBUTION 

In  connection  with  the  transfer  of  stock  by 
a  trustee  for  purposes  of  distribution,  it  will 
be  necessary  to  furnish  a  certified  copy  of  the 
will  together  with  a  certificate  showing  the 
trustee's  appointment. 

As  in  cases  of  sale  by  a  trustee,  the  corpora- 
tion must  determine  whether  the  distribution 
sought  to  be  made  by  the  trustee  is  in  accord 
with  the  provisions  of  the  will  establishing  the 
trust  and  defining  the  powers  thereunder. 

Transfers  by  testamentary  trustees  for  pur- 
poses of  distribution  are  made  necessary  because 
of  various  situations.  For  example,  a  trust  is 
created  for  the  benefit  of  A  for  his  life,  and 
upon  his  death  the  trust  terminates  and  the 
trust  estate  goes  to  B,  the  remainderman.  In 
this  case,  before  transferring  stock  into  B's 
name,  proof  of  the  death  of  A,  the  life  tenant, 
will  have  to  be  presented.  If  under  the  trust 
the  life  tenant  has  a  power  of  assignment  over 
it  will  be  necessary  before  the  corporation 
will  make  the  transfer  to  produce  evidence  of 
the  payment  of  whatever  inheritance  taxes 
are  imposed  under  the  law  or  waivers  by  the 
proper  authorities  consenting  to  such  transfer. 

Then  again  a  trust  may  provide  that  when  a 
certain  beneficiary  attains  a  designated  ag& 
the  trust  shall  terminate.  To  establish  that 
this  age  has  been  attained,  a  birth  certificate 
or  an  affidavit  by  a  person  having  knowledge 
of  the  facts  will  have  to  be  supplied. 


The  transfer  agent  is  not  properly  concerned 
as  to  whether  the  distribution  of  particular 
shares  is  being  made  in  equal  proportions.  It 
is  a  justifiable  assumption  that  the  other  bene- 
ficiaries are  receiving  their  proportionate  share 
of  the  trust  property  in  other  securities. 

Action  by  Joint  Fiduciaries 

It  is  well  settled  that  where  the  administra- 
tion of  a  trust  is  vested  in  co-trustees  they  all 
form  a  unit  and  must  execute  the  duties  of  their 
office  jointly  and  that  their  power  being  equal 
and  undivided  they  all  must  join  in  sales,  con- 
veyances, or  other  disposition  of  trust  property. 
Accordingly,  it  is  necessary  that  all  the  trustees 
join  in  the  execution  of  powers  of  transfer  unless 
it  is  otherwise  provided  in  the  trust  instrument. 

On  the  other  hand,  it  is  the  established  rule 
that  in  the  case  of  co-executors  one  executor 
may  act  alone  in  the  administration  of  the  estate 
and  his  acts  will  bind  the  estate.  Under  this 
rule  a  power  executed  by  an  executor  would  be 
sufficient  to  justify  a  transfer,  but  nevertheless 
it  is  commendable  practice  to  obtain  the  sig- 
natures of  all  executors  whenever  practicable. 
Many  transfer  officers  are  disposed  to  require 
this. 

*"-  Transfers  by  Guardians 

A  guardian  is  a  person  who  legally  has  the  care 
and  management  of  the  person,  or  the  estate,  or 
both,  of  a  child  during  his  minority. 

[43] 


A  guardian  ad  litem  is  a  person  who  has  been 
appointed  to  represent  the  infant  in  legal  pro- 
ceedings to  which  he  is  a  party  defendant. 

The  guardian  by  nature  or  natural  guardian 
of  an  infant  is  the  father,  and  on  his  death  the 
mother. 

Testamentary  guardians  are  appointed  by 
the  deed  or  last  will  of  the  father.  They  have 
control  of  the  person  and  the  real  and  personal 
estate  of  the  child  until  he  arrives  at  full 
age.  In  a  majority  of  cases  guardians  are 
those  appointed  by  the  court  pursuant  to 
statute. 

In  support  of  applications  for  transfers 
of  stock  by  a  guardian,  the  corporation  will 
ask  that  it  be  furnished  with  a  certificate  of 
recent  date  showing  his  appointment  as  guard- 
ian. 

The  powers  of  a  guardian  depend  so  much 
upon  state  laws  that  it  is  necessary  to  examine 
with  care  the  various  statutes  involved — to  see 
whether  there  is  any  limitation  upon  the 
authority  of  the  guardian  to  make  the  transfer 
in  question. 

If  the  transfer  sought  is  in  the  nature  of  a 
sale  the  power  of  the  guardian  to  make  the 
sale  can  only  be  determined  by  reference  to 
the  statutes  of  the  state  concerned.  If  under 
the  statutes  the  guardian  is  forbidden  to 
sell  securities  held  by  him  for  his  ward  with- 
out obtaining  specific  authority,  an  order  of 
court  authorizing  the  sale  will  have  to  be 
obtained. 

./  [44] 


Liability    of     Corporation    for    Refusal     to 
Transfer 

Where  a  corporation  wrongfully  refuses  to 
make  a  transfer  of  stock  upon  its  books  the 
transferee  (i)  may  treat  the  refusal  to  transfer 
the  shares  as  a  conversion  and  sue  the  corpora- 
tion for  their  value,  or  (2)  he  may  bring  an 
action  in  equity  to  compel  the  corporation  to 
register  the  transfer,  or  (3)  he  may  assert  his 
ownership  of  the  shares  irrespective  of  the  reg- 
istry and  sue  for  dividends  declared  upon  them. 

"As  a  general  rule  the  measures  of  damage 
to  which  a  transferee  is  entitled  for  the  re- 
fusal of  the  Corporation  to  register  the  trans- 
fer is  the  value  of  the  stock  not  at  the  time 
of  trial,  or  at  any  intermediate  period,  but  at 
the  time  of  the  demand  and  refusal  to  register, 
together  with  interest  thereon  from  the  time 
of  such  refusal  to  the  time  of  trial,  or  time  of 
judgment.  The  value  of  the  stock,  within 
the  meaning  of  this  rule,  is  ordinarily  its  mar- 
ket value,  and  in  the  absence  of  evidence  of 
actual  sales  its  par  value,  if  it  is  fully  paid  up, 
is  presumptively  its  market  value,  but  if  the 
stock  has  no  market  value  its  actual  value 
constitutes  the  measure  of  damages.  Ac- 
cording to  some  decisions,  however,  the 
transferee  can  recover  the  highest  market 
value  reached  by  the  stock  at  any  time  after 
the  refusal  to  transfer  and  before  trial." 
(14  C.  J.  771.) 

Usl 


Liability    of    Corporation    for    Erroneous  or 
Wrongful  Transfer 

/  A  corporation  is  under  a  duty  to  protect  its 
shareholders  from  unauthorized  transfers  and 
is  liable  to  such  shareholders  for  any  loss  sus- 
tained by  the  negligence  or  misconduct  of  its 
officers  and  agents  resulting  in  an  erroneous  or 
unlawful  transfer  of  its  stock. 

The  obligation  of  the  corporation  in  this 
regard  is  well  stated  in  the  case  of  Geyser-Mar- 
ion Gold  Mining  Company  vs.  Stark,  106  Fed. 
558,560  as  follows: 

"It  is  bound  to  use  reasonable  diligence  in 
every  case  to  ascertain  whether  or  not  a 
transfer  of  stock  requested  is  duly  authorized 
by  the  former  owner,  to  make  those  transfers 
that  are  so  authorized,  and  to  prevent  those 
that  are  unauthorized;  and  for  every  breach 
of  this  obligation,  it  is  legally  liable  to  the 
parties  injured  for  the  damage  it  thus  in- 
flicts." 

Where  a  corporation  makes  a  transfer  upon  a 
forged  power  of  attorney  or  assignment ,  the 
owner  is  not  deprived  of  his  ownership  of  the 
stock  but  may  sue  the  corporation  for  a  conver- 
sion of  the  shares  or  to  compel  a  cancellation 
of  the  transfer  and  the  issuance  of  a  new  certi- 
ficate to  the  rightful  owner. 

"Where  shares  stand  in   the   name  of  a 
person,  as  'executor',  'guardian',  or  'trustee', 


there  is  a  legal  presumption  that  he  holds  in  a 
fiduciary  capacity  and  without  the  power  of 
disposition  unless  that  power  is  given  by  the 
terms  of  the  trust  or  by  the  assent  of  the 
cestui  que  trust,  and  the  corporation  is  liable 
for  a  transfer  made  by  such  person  in  viola- 
tion of  his  trust,  if  by  the  exercise  of  reason- 
able care  it  could  have  prevented  it." 

As  a  general  rule,  where  a  corporation 
wrongfully  transfers  a  person's  shares  on  its 
books  and  issues  new  stock  to  someone  else, 
the  measure  of  damages  is  the  value  of  the 
stock  at  the  time  of  transfer.  There  is 
authority,  however,  which  holds  the  proper 
measure  of  damages  to  be  the  highest  value 
of  the  shares  between  the  time  of  such  trans- 
fer and  the  commencement  of  the  action. 
(14  C.  J.776-778.) 

Stock  Transfer  Tax  and  Inheritance 
Transfer  Tax  Laws 

It  is  not  practicable  in  this  book  to  cover  or 
even  to  enumerate  the  different  transfer  and 
inheritance  tax  laws  of  all  of  the  states.  For 
that  reason  in  addition  to  the  Federal  tax  laws 
those  of  but  one  State — New  York — are  briefly 
considered. 

In  presenting  stock  for  transfer  in  addition 
to  the  various  proofs  required,  it  will  be  neces- 
sary to  provide  for  the  payment  of  whatever 
transfer  taxes  are  imposed  by  law  upon  the 
transfer. 

[47] 


If  the  transfer  office  of  the  corporation  is 
located  in  New  York,  it  will  be  necessary  to 
provide  for  the  payment  of  both  Federal  and 
New  York  State  Stock  Transfer  taxes. 

New  York  State  Stock  Transfer  Tax 

The  tax  imposed  on  the  transfer  of  stock  in 
New  York  is  that  provided  for  by  Sees.  270-280 
of  the  Tax  Law,  Ch.  62,  Laws  of  1909,  as 
amended. 

By  this  act  a  tax  is  laid  on  "all  sales  or  agree- 
ments to  sell,  or  memoranda  of  sales  of  stock 
and  upon  any  and  all  deliveries  or  transfers  of 
shares  or  certificates  of  stock,  in  any  domestic 
or  foreign  corporation  made  after  the  ist  day 
of  June,  1905,"  of  two  cents  on  each  hundred 
dollars  of  face  value  or  fraction  thereof  except 
in  cases  where  the  shares  or  certificates  of  stock 
are  issued  without  designated  or  monetary 
value,  in  which  case  the  tax  shall  be  at  the  rate 
of  two  cents  for  each  and  every  share  of  such 
stock.  Payment  of  the  tax  must  be  denoted 
by  an  adhesive  stamp  or  stamps  affixed  in  the 
manner  adapted  to  the  circumstances  of  the  sale. 

A  violation  of  the  act  by  a  transfer  without 
payment  of  the  tax  is  made  a  misdemeanor  and 
may  be  punished  by  a  fine  or  imprisonment  or 
both,  and  the  offender  is  also  subject  to  certain 
civil  penalties  for  each  violation  to  be  recovered 
by  the  State  Comptroller  in  any  court  of  com- 
petent jurisdiction. 

The  statute  further  provides  that  no  transfer 

[48] 


of  stock  without  payment  of  the  tax  shall  be 
made  the  basis  of  any  action  or  legal  proceed- 
ing, nor  shall  proof  thereof  be  offered  or  received 
in  evidence  in  any  court  in  this  state. 

The  transfers  covered  by  the  foregoing  statute 
are  those  which  relate  to  transactions  between 
living  persons  and  not  to  devolution  of  title 
caused  by  death. 

The  statute  is  applicable  to  sales  or  trans- 
fers of  shares  or  certificates  of  stock  in  "as- 
sociations and  companies"  as  well  as  in  cor- 
porations. 

The  Attorney-General  of  the  State  of  New 
York  has  ruled  that  the  transfer  of  stock  from 
the  name  of  a  decendent  to  his  executor  or  ad- 
ministrator as  such  is  not  taxable  under  the 
above  law,  there  being  no  change  of  beneficial 
ownership,  but  that  the  subsequent  transfer 
thereof  by  the  executor  or  administrator  to  the 
legatee  or  next  of  kin  falls  within  the  provisions 
of  the  law  and  is  subject  to  the  payment  of  the 
tax. 

The  Attorney-General  has  also  ruled  that 
a  transfer  of  stock  from  an  executor  to  him- 
self as  trustee  is  taxable,  executors  in  the 
eyes  of  the  law  being  distinct  persons  from 
trustees. 

Federal  Stock  Transfer  Tax 

Under  the  Federal  Revenue  Act  of  1918,  a 
similar  tax  is  imposed  upon  "  all  sales,  or  agree- 
ments to  sell,  or  memoranda  of  sales  or  deliver- 

[49] 


ies  of,  or  transfers  of  legal  title  to  shares  or  certi- 
ficates of  stock  or  of  profits  or  of  interest  in  prop- 
erty or  accumulations  in  any  corporation,  or 
to  rights  to  subscribe  for  or  to  receive  such 
shares  or  certificates,  whether  made  upon  or 
shown  by  the  books  of  the  corporation,  or  by 
any  assignment  in  blank,  or  by  any  delivery,  or 
by  any  paper  or  agreement  or  memorandum  or 
other  evidence  of  transfer  or  sale,  whether  en- 
titling the  holder  in  any  manner  to  the  benefit 
of  such  stock,  interest,  or  rights,  or  not,  on  each 
$  i  oo  of  face  value  or  fraction  thereof,  2  cents, 
and  where  such  shares  are  without  par  or  face 
value,  the  tax  shall  be  2  cents  on  the  transfer 
or  sale  or  agreement  to  sell  on  each  share,  unless 
the  actual  value  thereof  is  in  excess  of  $100  per 
share,  in  which  case  the  tax  shall  be  2  cents  on 
each  $100  of  actual  value  or  fraction  thereof." 

The  act  provides  that  the  tax  shall  not  be 
imposed  upon  deliveries  or  transfers  to  a  broker 
for  sale,  nor  upon  deliveries  or  transfers  by  a 
broker  to  a  customer  for  whom  or  upon  whose 
order  he  has  purchased  the  same,  but  such 
deliveries  or  transfers  shall  be  accompanied  by 
a  certificate  setting  forth  the  facts. 

As  in  the  case  of  the  New  York  State  Transfer 
Tax  the  payment  of  the  Federal  tax  is  denoted 
by  stamps,  affixed  in  the  manner  provided  by 
the  statute.  Likewise,  a  violation  of  the  act  by 
a  transfer  without  payment  of  the  tax  is  made  a 
misdemeanor  punishable  by  a  fine  of  not  ex- 
ceeding $1,000  or  imprisonment  of  not  more 
than  six  months,  or  both. 

[so] 


The  act  applies  to  transfers  made  after  April 
i,  1919. 

Under  Regulations  promulgated  by  the 
United  States  Commissioner  of  Internal  Reve- 
nue, the  transfer  of  stock  to  or  by  trustees  is 
subject  to  the  tax;  so  also  is  the  transfer  of 
stock  from  parties  occupying  fiduciary  relations 
to  those  for  whom  they  hold  stock. 

The  transfer  of  stock  by  an  executor  or  ad- 
ministrator to  the  legatee  or  distributee  is  sub- 
ject to  the  tax  but  not  the  transfer  from  the 
decedent  to  the  executor  or  administrator. 

We  have  seen  that  in  connection  with  trans- 
fers of  stock  out  of  the  names  of  decedents  it  is 
necessary  to  obtain  and  file  with  the  corpora- 
tion certain  inheritance  tax  waivers. 

An  inheritance  tax  waiver  is  a  written  state- 
ment made  by  an  authorized  state  official  in 
which  consent  is  given  to  a  transfer  of  stock 
standing  in  the  name  of  or  in  trust  for  a  de- 
ceased person. 

These  waivers  or  consents  are  proof  that  the 
transfer  is  one  not  taxable  under  the  inheritance 
tax  laws  of  a  particular  state  or  that  the  in- 
heritance tax  due  thereon  has  been  paid  or 
provided  for. 

In  connection  with  transfers  made  in  New 
York  of  stock  standing  in  the  name  of  a  de- 
cedent, it  is  customary  for  the  corporation  to 
require  a  waiver  of  the  Comptroller  of  the 
State  of  New  York  consenting  to  the  trans- 
fer under  the  inheritance  tax  laws  of  that 
state. 


New  York  Inheritance  Tax 

Sees.  220-245  °f  tne  New  York  Tax  Law, 
Ch.  62,  Laws  of  1909,  as  amended,  contain  the 

E revisions  of  the  New  York  Inheritance  Tax 
aw. 

The  tax  is  imposed  on  all  transfers  of  property 
real  or  personal  made 

(1)  By  will  or  by  the  intestate  laws  of 
New  York. 

(2)  By  deed,  grant,  bargain,  sale  or  gift 
made  in  contemplation  of  the  death  of  the 
grantor,  vendor,  or  donor,  or  intended  to  take 
effect  in  possession  or  enjoyment  at  or  after 
such  death. 

(3)  By  the  exercise  of  a  power  of  appoint- 
ment. 

(4)  By  right  of  survivorship. 

When  the  decedent  dies  a  resident  of  New 
York  the  tax  is  upon  the  transfer  of  all  the  de- 
cedent's real  property  situated  within  said  state 
and  upon  all  his  tangible  and  intangible  per- 
sonalty wherever  situated. 

Where  the  decedent  dies  a  non-resident  of 
New  York  the  tax  is  upon: 

(a)  Real  property,  or  goods,  wares,  and 
merchandise  within  New  York. 

(b)  Shares  of  stock  of  New  York  corpora- 
tions and  of  national   banking   associations 
located  in  said  state. 

[5*1 


(c)  Shares  of  stock  of  foreign  corpora- 
tions, etc.,  and  bonds,  notes,  mortgages,  or 
other  evidences  of  interest  in  any  corpora- 
tions, etc.  (this  does  not  apply  to  securities 
of  moneyed,  railroad  or  transportation  cor- 
porations, nor  to  public  service  or  manufactur- 
ing corporations  as  defined  by  the  laws  of 
New  York)  which   represent    real   property 
wholly  or  partly  in  New  York,  and  interests  in 
partnership    business    conducted   wholly   or 

Eartly  in  said  state,  in  an  amount  determined 
y  the  proportion  which  the  value  of  the  real 
property  of  such  corporation  in  said  state  bears 
to  its  entire  property,  or  in  case  of  a  partner- 
ship, by  the  proportion  which  the  value  of  its 
entire  property  in  said  state  bears  to  its  entire 
property. 

(d)  Capital  invested  in  business  in  New 
York  by  a  non-resident  doing  business  in  said 
state  either  as  principal  or  partner. 

Sec.  221  of  the  Act  provides  for  the  exemp- 
tion of  certain  transfers  from  taxation  and 
the  rates  of  tax  are  set  forth  in  Sec.  221 -a 
thereof. 

The  rate  of  tax  upon  any  transfer  to  a  father, 
mother,  husband,  wife,  or  child  of  the  decedent 
above  the  exemption  of  $5,000  is : 

Up  to  and  including  $25,000,  one  per  cent. 

Upon  the  next  $75,000,  two  per  cent. 

Upon  the  next  $100,000,  three  per  cent. 

Upon  the  entire  balance,  four  per  cent. 

The  tax  upon  any  transfer  to  a  brother,  sister, 

[53] 


wife,  or  widow  of  a  son,  or  husband  of  a  daughter 
of  decedent,  or  to  any  child  to  whom  decedent 
stood  in  relation  of  a  parent  continuously  for 
ten  years,  beginning  before  the  child's  fifteenth 
birthday  upon  the  entire  amount  if  over  $500 
is: 

Up  to  and  including  $25,000,  two  per  cent. 

Upon  the  next  $75,000,  three  per  cent. 

Upon  the  next  $100,000,  four  per  cent. 

Upon  the  entire  balance,  five  per  cent. 

The  tax  upon  any  transfer  to  any  other  person 
or  corporation,  upon  the  entire  amount,  if  over 
$500  is: 

Up  to  and  including  $25,000,  five  per  cent. 

Upon  the  next  $75,000,  six  per  cent. 

Upon  the  next  $100,000,  seven  per  cent. 

Upon  the  entire  balance,  eight  per  cent. 

Sec.  22i-b  provides  for  an  additional  tax  of 
five  per  cent,  on  the  transfer  of  investments  or 
secured  debt  as  defined  by  Article  15  of  the  New 
York  Tax  Law  (i.  e.,  any  bond,  note,  debenture, 
etc.,  forming  part  of  a  series  payable  one  year 
or  more  from  date)  unless  the  tax  has  been  paid 
and  stamps  affixed,  as  provided  by  said  article, 
or  unless  it  can  be  proved  that  a  personal  prop- 
erty tax  was  assessed  on  such  investments  or 
unless  decedent  was  engaged  in  the  purchase 
and  sale  of  such  investments  as  a  business  in 
the  State  of  New  York  and  had  used  the  prop- 
erty in  question  for  such  business  and  had 
owned  it  for  not  more  than  eight  months  prior 
to  his  death. 

The  above  transfer  taxes  are  payable  at  the 

[54] 


time  of  transfer.  A  discount  of  five  per  cent,  is 
allowed  on  taxes  paid  within  six  months  from 
accrual.  The  tax  is  a  lien  upon  all  property 
transferred  until  paid  and  the  person  to  whom 
the  property  is  transferred  and  the  executors, 
administrators,  and  trustees  of  every  estate  are 
personally  liable  for  the  tax  until  paid. 

Executors,  administrators,  and  trustees  have 
power  to  sell  property  to  secure  funds  for  the 
payment  of  the  tax  in  the  same  manner  as  for 
the  payment  of  debts,  and  shall  deduct  the  tax 
from  all  legacies,  and  may  require  payment  of 
the  tax  before  delivering  specific  legacies  or 
property  subject  to  the  tax. 

Section  227  of  the  above  act  provides  that 
stocks  or  obligations  of  corporations  shall  not 
be  transferred  without  the  payment  of  the 
tax  and  no  safe  deposit  company,  trust  com- 
pany, corporation,  bank,  or  other  institution 
or  person  having  possession  or  control  of  securi- 
ties, deposits,  or  other  assets  belonging  to  or 
standing  in  the  name  of  a  decedent  who  was  a 
resident  or  non-resident,  or  belonging  to  or 
standing  in  the  joint  names  of  such  decedent 
and  one  or  more  persons,  including  the  shares 
of  the  capital  stock  of,  or  interest  in,  the  safe 
deposit  company,  etc.,  shall  deliver  or  transfer 
the  same  to  executors,  administrators,  or  legal 
representatives  of  decedent,  or  to  the  survivor 
or  survivors  when  held  in  the  joint  names  of 
decedent  and  one  or  more  persons,  unless  notice 
of  the  time  and  place  of  such  intended  delivery 
or  transfer  be  served  upon  the  State  Comptroller 


at  least  ten  days  prior  thereto,  nor  without 
retaining  a  sufficient  amount  to  pay  any  tax  and 
interest  which  may  be  assessed  on  account 
thereof,  unless  the  State  Comptroller  consents 
thereto  in  writing. 

For  a  failure  to  comply  with  this  section  a 
party  is  liable  to  pay  the  tax  and  interest  due  and 
in  addition  thereto  a  penalty  of  not  less  than  five 
nor  more  than  twenty-five  thousand  dollars. 

The  interpretation  placed  upon  this  section 
by  the  State  Comptroller  is  that  under  its 
provisions  no  individual  or  corporate  transfer 
agent  acting  within  the  State  of  New  York  or 
subject  to  its  jurisdiction,  without  becoming 
subject  to  the  act  and  its  prescribed  penalties, 
can  make  any  change  in  the  registered  ownership 
of  stock  or  bonds,  whether  of  a  domestic  or 
foreign  corporation,  standing  in  the  name  of  a 
decedent,  either  resident  or  non-resident,  unless 
notice  is  given  to  the  State  Comptroller  or  his 
consent  to  the  transfer  is  obtained  in  the  man- 
ner stated  in  the  statute. 

Federal  Estate  Tax 

The  Federal  Estate  Tax,  being  Title  IV  of  the 
Revenue  Act  of  1918,  effective  February  25, 
1919,  imposes  a  tax  "upon  the  transfer  of  the 
net  estate  of  every  decedent  dying  after  the 
passage  of  this  Act  whether  a  resident  or  non- 
resident of  the  United  States." 

The  Federal  Estate  Tax  was  first  imposed  by 
the  Revenue  Act  of  1916  which  taxed  the  entire 

[56] 


net  estate  of  every  person  dying  on  or  after 
September  9,  1916.  The  Act  of  1916  was 
amended  by  the  Act  of  March  3,  1917,  and  by 
the  Act  of  October  3,  1917,  both  of  which  in- 
creased the  rate  of  tax.  The  Revenue  Act  of 
1918,  effective  February  25,  1919,  supersedes  all 
prior  acts  as  to  the  estates  of  all  decedents  dying 
on  or  after  February  25,  1919. 

The  New  York  Inheritance  Transfer  Tax  is  a 
tax  upon  the  right  of  succession  and  is  as- 
sessed on  the  clear  market  value  of  any  prop- 
erty, real  or  personal,  so  transferred  and  upon 
any  interests  therein  or  income  therefrom  in 
trust  or  otherwise,  to  persons  or  corporations  with 
certain  prescribed  limitations  and  exceptions. 

The  Federal  Estate  Tax,  on  the  other  hand, 
is  not  laid  upon  the  property  but  upon  its  trans- 
fer from  the  decedent  to  others.  It  is  an 
estate  tax  and  it  is  imposed  upon  the  entire 
net  estate  and  not  upon  any  particular  legacy, 
devise,  or  distributive  share.  It  is  not  an 
individual  inheritance  tax  such  as  the  New  York 
Tax,  it  being  the  purpose  and  intent  of  the  law 
unless  otherwise  directed  by  the  will  of  the 
decedent  that  the  tax  shall  be  paid  out  of  the 
estate  before  distribution. 

The  tax  is  upon  the  transfer  of  the  net  estate 
of  every  resident  decedent  which  exceeds  $50,000 
and  on  so  much  of  the  estate  of  a  non-resident 
decedent  as  is  situated  within  the  United  States. 

The  amount  of  the  tax  is  obtained  by  finding 
the  percentage  of  the  net  estate  in  accordance 
with  the  following  table: 

[S7l 


EXCEEDING  NOT  EXCEEDING  PER  CENT. 

$       50,000  I 

$   50,000  150,000  2 

150,000  250,000  3 

250,000  45°>°oo  4 

450,000  750,000  6 

750,000  1,000,000  8 
and  so  on. 

The  tax  is  due  and  payable  one  year  from 
the  date  of  death.  The  executor  or  adminis- 
trator is  personally  liable  for  the  payment  of  the 
tax  to  the  amount  of  the  full  value  of  the  assets 
of  the  estate  which  have  come  into  his  hands. 


Lost  or  Destroyed  Certificates  of  Stock 

When  a  certificate  of  stock  has  been  lost  or 
destroyed,  a  corporation  in  lieu  thereof  may 
voluntarily  issue  a  new  certificate.  If,  however, 
the  corporation  refuses  to  issue  the  duplicate 
certificate  it  may  be  compelled  to  do  so  in  a 
proper  case  even  in  the  absence  of  any  statutory 
provision  on  the  subject. 

In  many  states  there  are  statutes  which  pro- 
vide for  the  issuance  of  duplicate  certificates  in 
place  of  those  lost  or  destroyed.  The  Uniform 
Stock  Transfer  Act  contains  the  following  pro- 
vision with  reference  to  this  subject: 

SEC.  178.  LJst  or  destroyed  certificate. 
Where  a  certificate  has  been  lost  or  de- 
stroyed, a  court  of  competent  jurisdiction 
may  order  the  issue  of  a  new  certificate  there- 


for  on  service  of  process  upon  the  corporation 
and  on  reasonable  notice  by  publication,  and 
in  any  other  way  in  which  the  court  may  di- 
rect, to  all  persons  interested,  -and  upon 
satisfactory  proof  of  such  loss  or  destruction 
and  upon  the  giving  of  a  bond  with  sufficient 
surety  to  be  approved  by  the  court  to  pro- 
tect the  corporation  or  any  person  injured 
by  the  issue  of  a  new  certificate  from  any 
liability  or  expense,  which  it  or  they  may 
incur  by  reason  of  the  original  certificate  re- 
maining outstanding.  The  court  may  also 
in  its  discretion  order  the  payment  of  the 
corporation's  reasonable  costs  and  counsel 
fees.  The  issue  of  a  new  certificate  under  an 
order  of  the  court  as  provided  in  this  section 
shall  not  relieve  the  corporation  from  liabil- 
ity in  damages  to  a  person  to  whom  the 
original  certificate  has  been  or  shall  be  trans- 
ferred for  value  without  notice  of  the  pro- 
ceedings or  of  the  issuance  of  the  new  cer- 
tificate." 

Frequently  the  matter  is  covered  by  an  ap- 
propriate provision  in  the  corporate  by-laws. 

Right  of  Corporation  to  Require  Bond  of 
Indemnity 

The  courts  have  generally  held  that  except 
in  cases  of  the  clearest  prob(  of  loss,  the  corpo- 
ration shall  not  be  required  to  issue  a  new  certifi- 
cate unless  a  bond  of  indemnity  against  its 
liability  to  possible  legal  holders  of  the  lost  cer- 

[59] 


tificate  be  given.  The  reasonableness  of  this 
requirement  is  obvious.  A  corporation  issuing 
a  certificate  of  stock  thereby  represents  that 
the  person  named  therein  owns  a  specific  num- 
ber of  shares  and  has  a  right  to  transfer  the 
same.  The  corporation  will  be  estopped  to 
deny  this  representation  as  against  a  bona-fide 
transferee,  at  least  to  such  an  extent  as  to 
entitle  such  bona-fide  transferee  to  recover  dam- 
ages. So  if  the  owner  of  a  certificate  should  trans- 
fer it  and  then,  representing  that  it  had  been  lost 
or  destroyed,  induce  or  compel  the  corporation 
to  issue  to  him  a  new  certificate  and  afterward 
transfer  this  latter  certificate,  the  corporation 
would  incur  liability  upon  both  certificates. 
(Fletcher  on  Corporations,  p.  5796,  Cook  on 
Corporations,  6th  Ed.,  p.  1049.) 

Statutes  in  some  states  expressly  require 
the  giving  of  indemnity.  As  has  been  seen,  the 
Uniform  Stock  Transfer  Act  contains  such  a 
provision. 

The  usual  requirements  which  are  exacted 
by  corporations  before  voluntarily  issuing  a 
duplicate  certificate  in  lieu  of  that  lost  or  de- 
stroyed are  the  following: 

(i)  Affidavit  of  the  owner  of  the  certifi- 
cate in  question  giving  a  full  and  complete 
description  of  such  certificate  and  stating  in 
detail  all  the  facts  and  circumstances  sur- 
rounding its  loss  or  destruction;  also  one  or 
more  corroborative  affidavits  by  persons  fa- 
miliar with  the  facts. 

[60] 


(2)  Bond  of  indemnity  with  surety  and  in 
form  satisfactory  to  the  corporation,  in 
double  the  face  value  of  the  certificate 
claimed  to  have  been  lost  or  destroyed,  in- 
demnifying the  corporation  against  any  dam- 
age which  may  arise  from  the  issue  of  the  du- 
plicate certificate. 

The  corporation  will  sometimes  require,  in 
addition  to  the  foregoing,  proof  of  the  publi- 
cation in  a  newspaper  of  general  circulation  pub- 
lished in  the  county,  city,  or  town  in  which  the 
owner  resides,  of  notice  of  the  loss  of  the  certi- 
ficate; such  proof  should  disclose  that  a  reason- 
able interval  of  time  (not  less  than  six  months) 
has  elapsed  since  the  advertisement  of  loss 
and  that  the  certificate  has  not  been  found. 

Stolen  or  Lost  Certificates  Endorsed  in  Blank 


If  the  holder  of  a  promissory  note,  endorsed 
in  blank,  loses  it  or  it  is  stolen  from  him,  a  sub- 
sequent bona-fide  purchaser  of  such  note  is  pro- 
tected as  against  the  person  who  lost  it.  This 
rule  is  held  not  to  be  generally  applicable  to 
certificates  of  stock  as  they  are  not  negotiable 
instruments.  In  some  cases,  however,  certain 
characteristics  of  negotiability  are  imparted  to 
certificates  of  stock.  As  is  said  in  Fletcher  on 
Private  Corporations,  p.  6296: 

"While  certificates   of  stock   are  not  ne- 
gotiable instruments  in  any  proper  sense  the 


courts  in  view  of  the  extensive  dealings  in 
such  securities  and  the  interest,  both  of  the 
public  and  of  the  corporations  issuing  them, 
in  making  them  readily  transferable  and  con- 
vertible have  largely  by  application  of  the 
equitable  doctrine  of  estoppel  clothed  them 
with  some  of  the  characteristics  of  negotiable 
paper.  They  are  frequently  said  to  be  quasi  - 
negotiable,  and  the  trend  of  modern  decisions 
is  to  make  them  as  nearly  negotiable  as  possi- 
ble. 'Such  certificates/  said  Mr.  Justice 
Davis,  'although  neither  in  form  nor  char- 
acter negotiable  paper,  approximate  to  it  as 
nearly  as  practicable/  So  title  to  them  will 
pass,  as  between  the  parties,  by  endorsement 
and  delivery  of  the  certificates,  as  in  the  case 
of  negotiable  instruments,  they  are  not 
subject  to  lis  pendens,  and  the  transferee  may, 
under  certain  circumstances,  acquire  a  better 
title  than  Jiis  transferrer  has/' 

It  is  well  settled,  therefore,  that  unless  the 
owner  of  a  certificate  of  stock  is  for  some  reason 
estopped  to  assert  his  title,  the  transfer  of 
the  certificate  even  to  a  bona-fide  purchaser  or 
pledgee  by  one  who  has  no  title  or  authority  to 
transfer  the  same  confers  upon  the  transferee 
no  title  as  against  the  owner. 

"In  accordance  with  this  principle  it  has  re- 
peatedly been  held  that  a  bona-fide  purchaser 
or  pledgee  of  a  certificate  of  stock  acquires  no 
title  thereto  where  he  takes  the  same  under 
a  forged  assignment  and  power  of  attorney. 

[62] 


This  is  true  not  only  where  the  certificate 
is  lost  or  stolen,  and  the  assignment  and 
power  of  attorney  is  forged  by  the  finder  or 
thief,  but  also  where  the  forgery  is  committed 
by  one  to  whom  the  certificate  has  been  en- 
trusted as  agent  or  bailee.  The  same  princi- 
ple applies  where  an  assignment  of  a  certi- 
ficate of  stock  is  endorsed  thereon  by  a 
person  without  any  authority  or  apparent 
authority  from  the  owner  although  without 
any  fraudulent  intent.  And  even  where  a 
lost  or  stolen  certificate  has  been  endorsed 
in  blank  by  the  person  appearing  on  the  books 
of  the  corporation  as  owner,  a  bona  fide 
transferee  acquires  no  title  as  against  the 
true  owner,  unless  the  latter  has  been  guilty 
of  such  negligence  as  will  estop  him  from 
asserting  his  title."  (Fletcher  on  Corpora- 
tions, p.  6433.) 

With  respect  to  the  applicability  of  the  doc- 
trine of  estoppel  to  this  question  the  same 
author  says  (pp.  6477-78) : 

"The  doctrine  that  a  bona-fide  purchaser 
of  shares  under  a  forged  or  unauthorized 
transfer  acquires  no  title  as  against  the  true 
owner  does  not  apply  where  the  circumstances 
are  such  as  to  estop  the  latter  from  asserting 
his  title.  Such  an  estoppel  may  arise  either 
from  acts  or  from  negligence.  It  is  a  well- 
settled  principle  that,  where  the  owner  of 
property  clothes  another  with  apparent  title 
to  the  same,  or  apparent  authority  to  dispose 


of  the  same,  he  will  be  estopped  to  deny  such 
apparent  title  or  authority  as  against  third 

Eersons  dealing  with  the  other  party  on  the 
lith  thereof.  And  in  accordance  with  this 
principle  it  has  been  repeatedly  held  that  the 
owner  of  shares  is  estopped  from  asserting 
his  title  as  against  a  bona-fide  purchaser  or 
pledgee  of  the  shares  from  one  whom  he  has 
intentionally  or  through  negligence  clothed 
with  apparent  title  thereto  or  with  apparent 
authority  to  transfer  the  same.  In  the  case 
of  stock  the  estoppel  generally  arises  from  the 
fact  that  the  owner  has  delivered  his  certificate 
to  a  third  person,  together  with  an  assignment 
and  power  of  attorney  to  transfer  the  same 
on  the  corporate  books  executed  in  blank." 

In  protecting  the  title  of  the  bona-fide  pur- 
chaser or  pledgee  in  these  various  cases  the 
Courts  frequently  place  reliance  upon  the  legal 
maxim  that  where  one  of  two  innocent  parties 
must  suffer  by  reason  of  a  wrongful  or  unau- 
thorized act  the  loss  must  fall  on  the  one  who 
first  trusted  the  wrongdoer  and  put  in  his  hands 
the  means  of  inflicting  such  loss.  (National  Safe 
Deposit  Savings  &  Trust  Company  vs.  Hibbs,  229 
U.  S.  391;  Moore  vs.  Metropolitan  National  Bank, 
55  N.  Y.  41.) 

A  frequently  cited  case  on  the  question  of 
estoppel  is  that  of  Knox  vs.  Eden  Musee  Company, 
148  N.  Y.  441,  in  which  it  was  held  that  the  fact 
that  the  president  of  a  business  corporation 
in  a  single  instance  relied  upon  its  manager,  an 

[64] 


employee  who  had  theretofore  proved  trust- 
worthy, to  cancel  in  pursuance  of  his  direc- 
tions, certain  certificates  of  stock  endorsed  in 
blank  and  surrendered  for  transfer  and  that 
for  that  purpose  the  uncancelled  certificates 
were  left  in  a  safe  to  which  the  manager  had 
access,  does  not  constitute  such  actionable 
negligence  as  will  estop  the  company  from 
claiming  such  certificates  as  against  a  bona-fide 
holder  to  whom  the  manager  thereafter  wrong- 
fully and  fraudulently  delivered  them,  as 
security  for  a  loan  to  himself,  or  render  the  cor- 
poration liable  to  such  holder  for  the  value  of 
the  certificates.  Generally,  however,  if  a  cer- 
tificate endorsed  in  blank  is  entrusted  to  an 
agent  for  a  particular  purpose  only,  and  in 
violation  of  his  instructions  he  sells  or  pledges 
it  to  another,  the  latter  will  take  title  as  against 
the  original  owner.  So  also  where  a  certificate 
so  endorsed  is  delivered  to  a  broker  or  other 
person  as  security  for  a  loan  or  as  a  margin,  or 
to  be  sold  or  pledged  by  him  for  the  benefit  of 
the  owner,  and  the  person  to  whom  it  is  so 
delivered  sells  or  pledges  it  as  his  own;  or  where 
the  certificate  is  pledged  with  authority  to 
re-pledge  it  to  the  extent  of  the  pledger's  in- 
debtedness and  it  is  re-pledged  as  security  for  a 
larger  amount  than  so  specified.  (See  Fletcher  on 
Corporations,  p.  6485,  and  cases  therein  cited.) 
The  question  as  to  what  acts  or  circumstances 
constitute  negligence  is  not  free  from  difficulty. 
It  has  been  held  that  a  person  is  not  guilty  of 
negligence  in  leaving  a  certificate  of  stock  en- 


dorsed  in  blank  in  a  safe  deposit  box  used  by 
himself  and  another  jointly  so  as  to  be  es- 
topped from  asserting  his  title  after  the  cer- 
tificate has  been  stolen  by  the  other  and  sold  or 
pledged  to  a  bona-fide  purchaser  or  pledgee. 
(Bangor  Electric  Light  &  Power  Company  vs. 
Robinson,  52  Fed.  520.) 

And  it  has  also  been  held  that  the  owner  of  a 
certificate  of  stock  is  not  negligent  in  placing 
it  endorsed  in  blank  in  a  drawer  of  his  safe  to 
which  his  employee  has  access,  where  he  has  no 
reason  to  doubt  the  latter's  honesty.  (The 
Farmers9  Sank  vs.  The  Diebold  Safe  &  Lock 
Company,  66  Ohio  St.  367.) 

It  is  said  in  Cook  on  Gbrporations,  yth  Ed., 
p.  1210,  that  the  law  of  estoppel  has  been 
applied  to  protect  a  bona-fide  purchaser  of 
stock  to  such  an  extent  that  excepting  in  cases  of 
certificates  transferred  in  blank  and  lost  or 
stolen  without  negligence  on  the  part  of  the 
owner  a  bona-fide  purchaser  is  protected  now  in 
almost  every  instance  where  he  would  be  pro- 
tected if  he  were  purchasing  a  promissory  note 
or  other  negotiable  instrument. 

The  author  further  states  that  the  courts  are 
extending  the  law  of  estoppel  and  that  in  the 
course  of  time  it  is  possible  that  certificates  of 
stock  may  become  more  negotiable  than  ne- 
gotiable instruments. 

It  is  provided  in  the  Uniform  Stock  Transfer 
Act  that  the  delivery  of  a  certificate  to  transfer 
title,  in  accordance  with  Sec.  162  of  said  act,  is 
effectual  with  certain  exceptions  though  made 

[66] 


by  one  having  no  right  of  possession  and  having 
no  authority  from  the  owner  of  the  certificate  or 
from  the  person  purporting  to  transfer  the  title. 

And  the  Act  also  provides  that  if  the  delivery 
of  a  certificate  was  made  without  authority 
from  the  owner  the  possession  of  the  certificate 
may  be  reclaimed  and  the  transfer  thereof 
rescinded,  unless  the  certificate  has  been  trans- 
ferred to  a  purchaser  for  value  in  good  faith 
without  notice  of  any  facts  making  the  trans- 
fer wrongful.  (See  Appendix,  Uniform  Stock 
Transfer  Act,  Sees.  166-168.) 

In  Miller  vs.  Dor  an,  151  111.  App.  527,  affd. 
245  111.  200,  it  was  held  that  the  above  Act 
provides  for  the  protection  of  a  bona-fide  pur- 
chaser or  pledgee  of  a  certificate  which  is  stolen 
after  it  has  been  endorsed  in  blank. 

It  appears  from  the  foregoing  that  certificates 
of  stock  are  inherently  non-negotiable.  It  also 
appears  that  under  certain  circumstances  the 
quality  of  the  negotiability  is  imparted  when  by 
reason  of  the  negligence  of  the  owner  the  certi- 
ficate is  permitted  to  pass  into  the  hands  of  a 
bona-fide  holder,  endorsed  in  blank  for  transfer. 
It  is  impracticable  to  lay  down  a  general  rule 
which  will  state  with  precision  the  acts  and  cir- 
cumstances constituting  such  negligence  as  will 
bring  this  rule  into  play.  Each  case  must  of 
necessity  turn  upon  its  own  particular  facts. 
Nor  is  it  practicable  as  yet  to  state  definitely 
how  far  the  law  on  this  subject  has  been  modi- 
fied or  affected  by  the  provisions  of  the  Uniform 
Stock  Transfer  Act. 

[67] 


The  Act,  it  is  believed,  goes  far  toward  con- 
ferring the  elements  of  negotiability  upon  a 
stock  certificate  which,  endorsed  in  blank  for 
transfer,  passes  into  bona-fide  hands,  and  such 
would  seem  to  be  the  construction  placed  upon 
it  by  the  highest  court  of  at  least  one  state. 
(Miller  vs.  Doran,  supra.) 

Transfer  of  Corporate  Bonds 

A  bond  of  a  corporation  is  an  instrument 
executed  under  the  seal  of  the  corporation  ac- 
knowledging a  loan  and  agreeing  to  pay  the  same 
upon  the  terms  set  forth  therein. 

The  instrument  usually  contains  a  descrip- 
tion of  the  particular  issue  of  bonds  to  which  it 
belongs  and  likewise  a  reference  to  the  mortgage 
security  therefor.  The  mortgage  securing  the 
bond  issue  is  made  to  a  trustee  for  the  benefit 
of  all  the  bondholders.  The  bonds  are  signed 
by  the  proper  corporate  officials  and  the  cor- 
porate seal  affixed. 

Sometimes  these  instruments  are  issued  with- 
out a  seal  in  which  case  although  technically 
not  bonds  they  are  usually  classed  as  such. 
(Huffcut's  Business  Law,  p.  169.) 

Corporate  bonds  may  be  divided  into  two 
general  classes — negotiable  bonds  and  non-negoti- 
able bonds. 

It  was  the  rule  at  common  law  that  an  in- 
strument under  seal  was  not  negotiable. 

It  is  now  well  settled  that  bonds  of  a  corpora- 
tion which  are  in  the  form  and  possess  the  re- 

[68] 


quisites  to  negotiability  in  other  instruments 
are  negotiable  even  if  they  are  under  seal.  (See 
Fletcher  on  Private  Corporations,  p.  1972, 
and  cases  therein  cited.) 

By  negotiability  is  meant  that  quality  which 
enables  an  instrument  to  be  transferred  from 
hand  to  hand  in  the  same  fashion  as  money. 

The  principal  results  of  negotiability  in  an 
instrument  are: 

(1)  The  transferee  acquires  a  legal  title 
and  can  sue  in  his  own  name. 

(2)  If  the  transferee  is  a  holder  for  value 
and  has  no  notice  of  any  defenses  which  his 
predecessor    in    title    could    have    asserted 
against  the  instrument  and  has  obtained  title 
before  maturity  he  takes  free  and  clear  from 
those  defenses. 

A  holder  for  value  without  notice  is  subject, 
however,  to  defenses  which  wholly  invalidate 
the  contract.  For  example,  he  is  free  from 
personal  defenses,  such  as  fraud,  duress,  want 
of  title  in  the  transferrer,  but  takes  subject  to 
absolute  defenses  such  as  forgery,  alteration, 
infancy  of  maker,  or  the  defense  that  the  in- 
strument is  void  by  statute. 

Negotiable  Instruments  Law 

The  law  as  to  negotiable  instruments  has 
been  embodied  in  a  Uniform  Negotiable  Instru- 
ments Law,  which  has  been  adopted  by  practi- 

[69] 


cally  every   state   in   this   country.     The   Act 
sets  forth  the  various  requirements  to  which  an 
instrument  must  conform  in  order  to  be  negoti- 
able. 
Among  these  requirements  are  the  following: 

(1)  It  must  be  in  writing  and  signed  by 
the  maker  or  drawer. 

(2)  It    must    contain    an    unconditional 
promise  or  order  to  pay  a  sum  certain  in 
money. 

(3)  It  must  be  payable  on  demand  or  at  a 
fixed  or  determinable  future  time. 

(4)  It  must  be  payable  to  order  or  bearer. 

The  courts  have  held  that  this  Act  is  applic- 
able to  corporate  bonds  so  as  to  make  them 
non-negotiable  if  they  are  wanting  in  respect 
of  any  requirement  of  the  statute. 

Coupon  Bonds 

Coupon  bonds  are  bonds  payable  to  a  named 
person  or  order  or  to  bearer,  and  which  have  at- 
tached to  them  "coupon"  notes  or  warrants 
for  each  installment  of  interest  as  it  falls  due. 

These  coupons  are  payable  to  order  or  bearer 
and  when  detached  are  negotiable.  They  are 
cut  off  and  presented  at  their  maturity  for  the 
payment  of  interest  or  they  may  be  severed  be- 
fore maturity  and  negotiated  like  a  promissory 
note. 

The  usual  form  of  negotiable  bond  is  a  coupon 

[70] 


bond  payable  to  bearer.  When  negotiable 
bonds  are  made  payable  to  some  payee  or  his 
order  they  are  transferable  by  endorsement  and 
delivery.  When  they  are  made  payable  to  a 
payee  or  bearer  or  simply  to  bearer  they  are 
transferable  by  mere  delivery.  (9  C.  J.  51.) 

As  was  stated  in  the  case  of  Benwell  vs.  Newark 
55  N.  J.  Eq.  260,  coupon  bonds  payable  to 
bearer. 

" may  be  passed  from  hand  to  hand 

without  any  formality  except  the  mere  tradi- 
tion of  the  paper.  This  ease  of  transfer  gives 
this  class  of  securities  its  peculiar  value.  The 
collection  of  interest  is  made  by  simply  de- 
taching the  coupon  and  presenting  it  at  the 
place  of  payment,  either  directly  or  through 
the  usual  course  of  bank  exchanges,  where  it 
is  paid  without  inquiry  as  to  the  ownership 
of  the  bond  from  which  it  has  been  cut.  The 
disadvantage  of  this  sort  of  security  is  the 
danger  of  its  loss  by  theft  or  fire." 

Registered  Bonds 

A  registered  "bond  is  one  which  is  payable  to 
a  particular  individual  whose  name  is  entered 
on  the  books  of  the  corporation  as  the  registered 
owner.  On  the  interest  days  payment  thereof 
is  made  directly  to  the  registered  holder  without 
presentation  of  the  bond  usually  by  check  drawn 
to  his  order  and  sent  by  mail. 

The  courts  have  held  with  practical  unanimity 


that  registered  bonds  are  not  negotiable.  Among 
the  cases  so  holding  may  be  cited : 

Scollans  vs.  Rollins,  173  Mass.  275. 
Benwell  vs.  Newark,  55  N.  J.  Eq.  260. 
Chester    County   Guarantee    Trust   13    Safe 
Deposit  Company  vs.  Securities  Company, 
165  N.  Y.    App.  Div.  329. 
Cronin  vs.  Patrick  County,  89  Fed.  79. 

As  is  pointed  out  by  Daniels  in  his  work  on 
Negotiable  Instruments,  p.  1683,  bonds  are 
in  fact  registered  so  as  to  make  them  transfer- 
able in  such  manner  as  to  exclude  equities  be- 
tween the  original  parties  only  by  registry  upon 
the  books  of  the  corporation  issuing  them. 

With  reference  to  registered  bonds  Fletcher 
in  his  work  on  Private  Corporations,  p.  1920, 
says: 

"The  peculiar  value  of  this  class  of  securi- 
ties lies  in  the  fact  that  it  is  not  necessary 
to  produce  them  to  the  debtor  each  time  the 
interest  is  due,  and  that  the  danger  of  loss 
by  robbery,  fire,  etc.,  is  entirely  removed.  It 
follows  that  if  such  bonds  are  stolen  from  the 
owner  he  has  the  right  to  recover  them  wher- 
ever found,  and  if  they  cannot  be  found  he 
may  recover  their  value  from  those  who  were 
instrumental  in  changing  them  from  regis- 
tered to  negotiable  bonds." 

In  order  to  transfer  title  to  a  registered  bond 
a  form  of  assignment  is  required  to  be  executed 

{7*1 


by  or  on  behalf  of  the  registered  holder.  It  is 
similar  to  that  used  in  transferring  stock  and 
when  not  found  on  the  back  of  the  bond  a 
detached  form  is  used. 

The  following  is  an  accepted  form  of  assign- 
ment with  power  of  attorney  to  transfer  the 
bonds  on  the  books  of  the  corporation : 

,         KNOW  ALL  MEN  BY  THESE  PRESENTS 
THAT 

FOR  VALUE  RECEIVED,  have  bargained,  sold,  assigned,  and 
transferred,  and  by  these  presents  do  bargain,  sell,  assign, 

and  transfer  unto 

. .  Bond  of  the. . , 


No 

For  $..... 

standing  in name  on  the  books  of  said 

AND do  hereby  constitute  and  appoint 

true   and   lawful  Attorney,   IR- 
REVOCABLE, for and  in name  and  stead 

but  to use,  to  sell,  assign,  transfer,  and  set  over. . . 

the  said  Bond  and  for  that  purpose 

to  make  and  execute  all  necessary  acts  of  assignment  and 
transfer,  and  to  substitute  one  or  more  persons  with  like 

full  power,  hereby  ratifying  and  confirming  all  that 

said   Attorney   or substitute   or   substitutes 

shall  lawfully  do  by  virtue  hereof. 

Dated 19    4 

Signed  and  Acknowledged  in  the  Presence  of 


[SEAL] 


Bonds  may  be  registered  as  to  principal  only 
or  as  to  both  principal  and  interest.  In  the 
former  case  the  registration  is  made  by  writing 

[73] 


the  name  of  the  holder  in  a  space  provided  for 
that  purpose  on  the  bond  and  making  a  record 
on  the  books  of  the  corporation. 

In  the  event  that  the  bond  is  to  be  registered 
as  to  both  principal  and  interest,  the  bond  is 
usually  surrendered  and  a  registered  bond  issued 
to  the  bondholder.  The  registration  is  also  re- 
corded on  the  corporate  books. 

Generally  the  conditions  governing  the  trans- 
fer of  registered  bonds,  the  exchange  of  bearer 
bonds  for  registered  bonds,  and  the  discharge  of 
the  latter  from  registry  are  fully  set  forth 
in  corporate  mortgages  securing  the  bonds  in 
question. 

The  various  questions  which  arise  in  the  case 
of  the  transfer  of  stock  are  also  presented  in 
connection  with  the  transfer  of  registered  bonds. 
The  different  rules  and  principles  heretofore 
considered  are  in  the  main  applicable  in  re- 
spect of  both  stock  and  bonds.  In  each  case 
the  necessity  for  proper  description  of  the 
assignor  and  assignee  exists,  also  for  proof 
of  signatures  and  of  authority  to  make  the 
transfer. 

So  also  are  these  rules  and  principles  ap- 
plicable to  the  transfer  of  United  States  bonds. 
The  Treasury  Department  in  its  Department 
Circular,  No  141,  promulgated  September  15, 
1919,  has  prescribed  certain  rules  and  regulations 
governing  "transactions  involving  the  inter- 
change of  Liberty  Bonds  and  Victory  Notes  of 
different  denominations,  the  interchange  of 
coupon  and  registered  bonds  and  notes,  and  the 

[74] 


transfer  of  registered  bonds  and  notes."  Certain 
of  these  rules  and  regulations  are  set  forth  in  the 
Appendix  to  this  volume. 

The  principles  governing  the  liability  of  a 
corporation  for  refusal  to  transfer  its  stock  or 
for  an  erroneous  or  unlawful  transfer  thereof 
which  have  been  briefly  stated  in  a  previous  sec- 
tion are  equally  applicable  to  the  transfer  of 
bonds. 

The  corporation  making  the  stock  or  bond 
transfer  on  its  books  will  be  equally  alert  to 
see  that  the  transferrer  (individual,  trustee,  or 
fiduciary)  is  authorized  to  make  the  transfer 
and  will  require  in  the  case  both  of  bonds  and 
stock  whatever  proofs  are  deemed  essential  to 
the  adequate  protection  of  the  company  and  to 
the  proper  safeguarding  of  the  rights  and  obliga- 
tions of  transferrer  and  transferee. 

The  Stock  Transfer  Tax  Acts  are  of  course 
inapplicable  to  the  transfer  of  bonds.  As  re- 
spects Inheritance  Transfer  Tax  Acts,  the 
statutes  of  the  state  or  states  concerned  should 
be  examined  to  determine  whether  or  not  they 
cover  transfers  of  bonds  and  whether  or  not 
inheritance  tax  waivers  should  be  obtained  pre- 
liminary to  transfer. 

Lost  or  Destroyed  Bonds 

The  owner  of  lost  or  destroyed  negotiable 
bonds  has  the  same  rights  as  in  the  case  of  any 
other  negotiable  instrument.  He  may  compel 
the  corporation  to  issue  new  ones  to  him  upon 


proof  of  the  loss  or  destruction  and  the  giving 
of  adequate  indemnity  (Miller  vs.  Rutland  &  W. 
R.  Company  y  40  Vt.  399;  Chesapeake  S3  Ohio 
Canal  Company ,  vs.  Blair  y  45  Md.  102). 

Stolen  Bonds 

It  is  well  settled  that  where  negotiable  bonds 
are  stolen  and  are  acquired  by  a  bona-fide  pur- 
chaser, the  owner  from  whom  they  were 
stolen  cannot  recover  from  the  corporation. 
The  title  to  stolen  negotiable  bonds  vests  in  the 
transferee  provided  he  is  a  bona-fide  holder. 

Where  bonds  are  stolen  after  maturity,  the 
purchaser  although  otherwise  a  bona-fide  holder 
takes  no  title  as  against  the  true  owner. 

If  the  bonds  are  not  negotiable  the  transferee 
acquires  no  title.  Thus,  the  owner  of  registered 
bonds  which  have  been  stolen  and  transferred 
by  means  of  forged  endorsements  may  reclaim 
them  in  the  hands  of  the  transferee  even  though 
new  bonds  have  been  issued  to  the  transferee 
in  his  own  name  in  place  of  the  stolen  ones. 
(Chester  County  Guarantee  Trust  &  Safe  Deposit 
Company  vs.  Securities  Company  165  N.  Y.  App. 
Div.  329.) 


[76] 


APPENDIX 


APPENDIX 
Uniform  Stock  Transfer  Law 

The  Uniform  Stock  Transfer  Law,  which  has  been  in- 
corporated into  the  law  of  a  number  of  states,  was  drafted 
by  the  Commission  for  the  Promotion  of  Uniformity  of 
Legislation.  It  is  found  in  Article  6  of  the  Personal 
Property  Law  of  New  York  (Laws  1913,  ch.  600,  in  effect 
September  I,  1913)  and  its  provisions  are  as  follows: 

§162.  How  title  to  certificates  and  shares  may  be  trans- 
ferred. Title  to  a  certificate  and  to  the  shares  represented 
thereby  can  be  transferred  only, 

(a)  By  delivery  of  the   certificate   indorsed   either 
in  blank  or  to  a  specified  person  by  the  person  appearing 
by  the  certificate  to  be  the  owner  of  the  shares  repre- 
sented thereby,  or 

(b)  By  delivery  of  the  certificate  and  a  separate 
document  containing  a  written  assignment  of  the  certi- 
ficate or  a  power  of  attorney  to  sell,  assign,  or  transfer  the 
same  or  the  shares  represented  thereby,  signed  by  the 
person  appearing  by  the  certificate  to  be  the  owner  of 
the  shares  represented  thereby.     Such  assignment  or 
power  of  attorney  may  be  either  in  blank  or  to  a  specified 
person. 

The  provisions  of  this  section  shall  be  applicable  al- 
though the  charter  or  articles  of  incorporation  or  code  of 
regulations  or  by-laws  of  the  corporation  issuing  the 
certificate  and  the  certificate  itself  provide  that  the  shares 
represented  thereby  shall  be  transferable  only  on  the  books 
of  the  corporation  or  shall  be  registered  by  a  registrar  or 
transferred  by  a  transfer  agent. 

§163.  Powers  of  those  lacking  full  legal  capacity  and  of 
fiduciaries  not  enlarged.  Nothing  in  this  article  shall  be 

[79] 


construed  as  enlarging  the  powers  of  an  infant  or  other  per- 
son lacking  full  legal  capacity,  or  of  a  trustee,  executor,  or 
administrator,  or  other  fiduciary,  to  make  a  valid  indorse- 
ment, assignment,  or  power  of  attorney. 

§164.  Corporation  not  forbidden  to  treat  registered  holder 
as  owner.  Nothing  in  this  article  shall  be  construed  as 
forbidding  a  corporation, 

(a)  To  recognize  the  exclusive  right  of  a  person  reg- 
istered on  its  books  as  the  owner  of  shares  to  receive 
dividends,  and  to  vote  as  such  owner,  or 

(b)  To  hold  liable  for  calls  and  assessments  a  person 
registered  on  its  books  as  the  owner  of  shares. 

i 

§165.  Title  derived  from  certificate  extinguishes  title 
derived  from  a  separate  document.  The  title  of  a  transferee 
of  a  certificate  under  a  power  of  attorney  or  assignment 
not  written  upon  the  certificate,  and  the  title  of  any  person 
claiming  under  such  transferee,  shall  cease  and  determine 
if,  at  any  time  prior  to  the  surrender  of  the  certificate  to 
the  corporation  issuing  it,  another  person,  for  value  in  good 
faith,  and  without  notice  of  the  prior  transfer,  shall  pur- 
chase and  obtain  delivery  of  such  certificate  with  the  in- 
dorsement of  the  person  appearing  by  the  certificate  to  be 
the  owner  thereof,  or  shall  purchase  and  obtain  delivery 
of  such  certificate  and  the  written  assignment  or  power  of 
attorney  of  such  person,  though  contained  in  a  separate 
document. 

§166.  Who  may  deliver  a  certificate.  The  delivery  of  a 
certificate  to  transfer  title  in  accordance  with  the  provisions 
of  section  one  hundred  and  sixty-two  is  effectual,  except 
as  provided  in  section  one  hundred  and  sixty-eight,  though 
made  by  one  having  no  right  of  possession  and  having  no 
authority  from  the  owner  of  the  certificate  or  from  the 
person  purporting  to  transfer  the  title. 

§167.  Indorsement  effectual  in  spite  of  fraud,  duress, 
mistake,  revocation,  death,  incapacity,  or  lack  of  considera- 
tion or  authority.  The  indorsement  of  a  certificate  by  the 
person  appearing  by  the  certificate  to  be  the  owner  of  the 
shares  represented  thereby  is  effectual,  except  as  provided 

[so] 


in  section  one  hundred  and  sixty-eight,  though  the  in- 
dorser  or  transferor 

(a)  Was  induced  by  fraud,  duress,  or  mistake  to  make 
the  indorsement  or  delivery,  or 

(b)  Has  revoked  the  delivery  of  the  certificate,  or 
the  authority  given  by  the  indorsement  or  delivery  of 
the  certificate,  or 

(c)  Has  died  or  become  legally  incapacitated  after 
the  indorsement,  whether  before  or  after  the  delivery 
of  the  certificate,  or 

(d)  Has  received  no  consideration. 

§168.    Rescission  of  transfer.    If  the  indorsement  or 
delivery  of  a  certificate, 

(a)  Was  procured  by  fraud  or  duress,  or 

(b)  Was  made  under  such  mistake  as  to  make  the 
indorsement  or  delivery  inequitable;  or 

If  the  delivery  of  a  certificate  was  made 

(c)  Without  authority  from  the  owner,  or 

(d)  After  the  owner's  death  or  legal  incapacity,  the 
possession  of  the  certificate  may  be  reclaimed  and  the 
transfer  thereof  rescinded,  unless: 

1.  The  certificate  has  been  transferred  to  a  purcha- 
ser for  value  in  good  faith  without  notice  of  any  facts 
making  the  transfer  wrongful,  or 

2.  The  injured  person  has  elected  to  waive  the  in- 
jury, or  has  been  guilty  of  laches  in  endeavoring  to  en- 
force his  rights. 

Any  court  of  appropriate  jurisdiction  may  enforce 
specifically  such  right  to  reclaim  the  possession  of  the 
certificate  or  to  rescind  the  transfer  thereof,  and,  pending 
litigation,  may  enjoin  the  further  transfer  of  the  certificate 
or  impound  it. 

§169.  Rescission  of  transfer  of  certificate  does  not  invali- 
date subsequent  transfer  by  transferee  in  possession.  Al- 
though the  transfer  of  a  certificate  or  of  shares  represented 
thereby  has  been  rescinded  or  set  aside,  nevertheless,  if 
the  transferee  has  possession  of  the  certificate  or  of  a  new 
certificate  representing  part  or  the  whole  of  the  same 
shares  of  stock,  a  subsequent  transfer  of  such  certificate 

[81] 


by  the  transferee,  mediately  or  immediately,  to  a  pur- 
chaser for  value  in  good  faith,  without  notice  of  any  facts 
making  the  transfer  wrongful,  shall  give  such  purchaser  an 
indefeasible  right  to  the  certificate  and  the  shares  repre- 
sented thereby. 

§170.  Delivery  of  unindorsed  certificate  imposes  obliga- 
tion to  indorse.  The  delivery  of  a  certificate  by  the  person 
appearing  by  the  certificate  to  be  the  owner  thereof  with- 
out the  indorsement  requisite  for  the  transfer  of  the  cer- 
tificate and  the  shares  represented  thereby,  but  with  intent 
to  transfer  such  certificate  or  shares,  shall  impose  an  obli- 
gation, in  the  absence  of  an  agreement  to  the  contrary, 
upon  the  person  so  delivering,  to  complete  the  transfer  by 
making  the  necessary  indorsement.  The  transfer  shall 
take  effect  as  of  the  time  when  the  indorsement  is  actually 
made.  This  obligation  may  be  specifically  enforced. 

§171.  Ineffectual  attempt  to  transfer  amounts  to  a  prom- 
ise to  transfer.  An  attempted  transfer  of  title  to  a  certi- 
ficate or  to  the  shares  represented  thereby  without  delivery 
of  the  certificate  shall  have  the  effect  of  a  promise  to  trans- 
fer and  the  obligation,  if  any,  imposed  by  such  promise 
shall  be  determined  by  the  law  governing  the  formation 
and  performance  of  contracts. 

§172.  Warranties  on  sale  of  certificate.  A  person  who 
for  value  transfers  a  certificate,  including  one  who  assigns 
for  value  a  claim  secured  by  a  certificate,  unless  a  contrary 
intention  appears,  warrants — 

(a)  That  the  certificate  is  genuine, 

(b)  That  he  has  a  legal  right  to  transfer  it,  and 

(c)  That  he  has  no  knowledge  of  any  fact  which 
would  impair  the  validity  of  the  certificate. 

In  the  case  of  an  assignment  of  a  claim  secured  by  a  cer- 
tificate, the  liability  of  the  assignor  upon  such  warranty 
shall  not  exceed  the  amount  of  the  claim. 

§173.  No  warranty  implied  from  accepting  payment 
of  a  debt.  A  mortgagee  pledgee,  or  other  holder  for  se- 
curity of  a  certificate  who  in  good  faith  demands  or  re- 
ceives payment  of  the  debt  for  which  such  certificate  is 
security,  whether  from  a  party  to  a  draft  drawn  for  such 


debt,  or  from  any  other  person,  shall  not  by  so  doing  be 
deemed  to  represent  or  to  warrant  the  genuineness  of  such 
certificate,  or  the  value  of  the  shares  represented  thereby. 

§174.  No  attachment  or  levy  upon  shares  unless  certi- 
ficate surrendered  or  transfer  enjoined.  No  attachment 
or  levy  upon  shares  of  stock  for  which  a  certificate  is  out- 
standing shall  be  valid  until  such  certificate  be  actually 
seized  by  the  officer  making  the  attachment  or  levy,  or  be 
surrendered  to  the  corporation  which  issued  it,  or  its 
transfer  by  the  holder  be  enjoined.  Except  where  a  cer- 
tificate is  lost  or  destroyed,  such  corporation  shall  not  be 
compelled  to  issue  a  new  certificate  for  the  stock  until  the 
old  certificate  is  surrendered  to  it. 

§175.  Creditor's  remedies  to  reach  certificate.  A  credi- 
tor whose  debtor  is  the  owner  of  a  certificate  shall  be 
entitled  to  such  aid  from  courts  of  appropriate  jurisdiction, 
by  injunction  and  otherwise,  in  attaching  such  certificate 
or  in  satisfying  the  claim  by  means  thereof  as  is  allowed 
at  law  or  in  equity,  in  regard  to  property  which  cannot 
readily  be  attached  or  levied  upon  by  ordinary  legal 
process. 

§176.  There  shall  be  no  lien  or  restriction  unless  indicated 
on  certificate.  There  shall  be  no  lien  in  favor  of  a  corpora- 
tion upon  the  shares  represented  by  a  certificate  issued 
by'such  corporation  and  there  shall  be  no  restriction  upon 
the  transfer  of  snares  so  represented  by  virtue  of  any  by- 
law of  such  corporation,  or  otherwise,  unless  the  right  of 
the  corporation  to  such  lien  or  the  restriction  is  stated 
upon  the  certificate. 

§177.  Alteration  of  certificate  does  not  divest  title  to 
shares.  The  alteration  of  a  certificate,  whether  fraudu- 
lent or  not  and  by  whomsoever  made,  shall  not  deprive 
the  owner  of  his  title  to  the  certificate  and  the  snares 
originally  represented  thereby,  and  the  transfer  of  such  a 
certificate  shall  convey  to  the  transferee  a  good  title  to 
such  certificate  and  to  the  shares  originally  represented 
thereby. 

§178.  Lost  or  destroyed  certificate.  Where  a  certificate 
has  been  lost  or  destroyed,  a  court  of  competent  jurisdic- 
tion may  order  the  issue  of  a  new  certificate  therefor  on 


service  of  process  upon  the  corporation  and  on  reasonable 
notice  by  publication,  and  in  any  other  way  which  the 
court  may  direct,  to  all  persons  interested,  and  upon  satis- 
factory proof  of  such  loss  or  destruction  and  upon  the  giv- 
ing of  a  bond  with  sufficient  surety  to  be  approved  by  the 
court  to  protect  the  corporation  or  any  person  injured  by 
the  issue  of  a  new  certificate  from  any  liability  or  expense, 
which  it  or  they  may  incur  by  reason  of  the  original  certifi- 
cate remaining  outstanding.  The  court  may  also  in  its 
discretion  order  the  payment  of  the  corporation's  reason- 
able costs  and  counsel  fees.  The  issue  of  a  new  certificate 
under  an  order  of  the  court  as  provided  in  this  section  shall 
not  relieve  the  corporation  from  liability  in  damages  to  a 
person  to  whom  the  original  certificate  has  been  or  shall  be 
transferred  for  value  without  notice  of  the  proceedings  or 
of  the  issuance  of  the  new  certificate. 

§179.  Rule  for  cases  not  provided  for  by  this  act.  In  any 
case  not  provided  for  by  this  act,  the  rules  of  law  and 
equity,  including  the  law  merchant,  and  in  particular  the 
rules  relating  to  the  law  of  principal  and  agent,  executors, 
administrators,  and  trustees,  and  to  the  effect  of  fraud,  mis- 
representation, duress,  or  coercion,  mistake,  bankruptcy, 
or  other  invalidating  cause,  shall  govern. 

§180.  Interpretation  shall  give  effect  to  purpose  of  uni- 
formity. This  act  shall  be  so  interpreted  and  construed  as 
to  effectuate  its  general  purpose  to  make  uniform  the  law 
of  those  states  which  enact  it. 

§181.  Definition  of  indorsement.  A  certificate  is  in- 
dorsed when  an  assignment  or  a  power  of  attorney  to  sell, 
assign,  or  transfer  the  certificate  or  the  shares  represented 
thereby  is  written  on  the  certificate  and  signed  by  the  per- 
son appearing  by  the  certificate  to  be  the  owner  of  the 
shares  represented  thereby,  or  when  the  signature  of  such 
person  is  written  without  more  upon  the  back  of  the  certifi- 
cate. In  any  of  such  cases  a  certificate  is  indorsed  though 
it  has  not  been  delivered. 

§182.  Definition  of  person  appearing  to  be  the  owner  of 
certificate.  The  person  to  whom  a  certificate  was  origi- 
nally issued  is  the  person  appearing  by  the  certificate 
to  be  the  owner  thereof,  and  of  the  shares  represented 


thereby,  until  and  unless  he  indorses  the  certificate  to  an- 
other specified  person,  and  thereupon  such  other  specified 
person  is  the  person  appearing  by  the  certificate  to  be  the 
owner  thereof  until  and  unless  he  also  indorses  the  certifi- 
cate to  another  specified  person.  Subsequent  special  in- 
dorsements may  be  made  with  like  effect. 

§183.  Other  definitions.  I.  In  this  article,  unless  the 
context  or  subject-matter  otherwise  requires-y 

" Certificate"  means  a  certificate  of  stock  in  a  corpora- 
tion organized  under  the  laws  of  this  state  or  of  another 
state  whose  laws  are  consistent  with  this  act. 

"Delivery"  means  voluntary  transfer  of  possession  from 
one  person  to  another. 

"Person"  includes  a  corporation  or  partnership  or  two 
or  more  persons  haying  a  joint  or  common  interest. 

To  "purchase"  includes  to  take  as  mortgagee  or  as 
pledgee. 

"Purchaser"  includes  mortgagee  and  pledgee. 
"Shares"  means  a  share  or  shares  of  stock  in  a  corpora- 
tion organized  under  the  laws  of  this  state  or  of  another 
state  whose  laws  are  consistent  with  this  act. 

"State"  includes  state,  territory,  district,  and  insular 
possession  of  the  United  States. 

"Transfer"  means  transfer  of  legal  title. 
"Title"  means  legal  title  and  does  not  include  a  merely 
equitable  or  beneficial  ownership  or  interest. 

"Value"  is  any  consideration  sufficient  to  support  ? 
simple  contract.  An  antecedent  or  preexisting  obliga- 
tion, whether  for  money  or  not,  constitutes  value  where  ^ 
certificate  is  taken  either  in  satisfaction  thereof  or  as  se- 
curity therefor. 

2.  A  thing  is  done  "in  good  faith"  within  the  meaning 
of  this  act,  when  it  is  in  fact  done  honestly,  whether  it  be 
done  negligently  or  not. 

§184.  Article  does  not  apply  to  existing  certificates. 
The  provisions  of  this  article  apply  only  to  certificates  is- 
sued after  the  taking  effect  of  this  article. 

§185.  Inconsistent  legislation  repealed.  All  acts  or 
parts  of  acts  inconsistent  with  this  article  are  hereby 
repealed. 

[85] 


Rulings  of  New  York  State  Comptroller 

On  December  I,  1919,  the  Comptroller  of  the  State  of 
New  York  issued  the  following  rulings  governing  the  col- 
lection of  taxes  on  the  transfers  of  stock: 

1.  The  application  and  scope  of  the  Stock  Transfei 
Tax  Law  has  been  considerably  broadened  by  the  amend- 
ments thereto,  effected  by  chapter  352  of  the  Laws  of  1911, 
chapter  292  of  the  Laws  of  1912,  chapter  779  of  the  Laws 
of  1913,  chapter  206  of  the  Laws  of  1914,  and  chapter  552 
of  the  laws  of  1916,  with  the  result  that  the  rulings  hereto- 
fore made  asserting  exemptions  from  the  tax  are  not  now 
as  a  rule  controlling. 

2.  A  tax  is  imposed  upon  all  sales  or  agreements  to  sell 
and  upon  all  deliveries  or  transfers  of  shares  or  certificates 
of  stock  of  any  and  all  associations,  companies  and  corpora- 
tions, whether  domestic  or  foreign  at  the  rate  of  two  cents 
on  each  hundred  dollars  of  face  value  or  fraction  thereof, 
except  where  shares  or  certificates  of  stock  are  issued 
without  designated  monetary  value,  in  which  case  the  tax 
shall  be  two  cents  for  each  and  every  share  of  such  stock. 

3.  The  statute  does  not  apply  to  the  original  issue  of 
stock;  but  all  sales  or  transfers  made  subsequent  thereto, 
whether  intermediate  or  final,  are  taxable. 

4.  It  is  not  necessary  to  render  it  taxable  that  the  trans- 
action involve  a  sale.     By  the  statute,  as  amended,  a  tax 
is  imposed  upon  all  sales  or  transfers  of  shares  or  certifi- 
cates of  stock,  whether  operating  to  convey  the  bene- 
ficial interest  in  or  merely  the  legal  title  to  said  stock,  or 
possession   or   use  thereof,  for   any   purpose.     The   only 
exceptions  to  this  rule  are  those  expressly  provided  for  in 
section  270  of  the  law.  \ 

5.  The  transfer  to  and  from  voting  trustees  is  taxable, 
also  the  transfer  of  voting  trust  certificates. 

6.  The  mere  surrender  of  a  certificate  of  stock  for  re-issue 
in  smaller  denominations  is  not  taxable;  but  if  re-issued  in 
part  to  the  original  owner  and  in  part  to  a  third  party  it  is 
taxable  to  the  extent  of  the  transfer  to  the  third  party. 

7.  Likewise  the  mere  surrender  of  a  certificate  of  stock 
held  by  a  deceased  person  for  issuance  in  the  name  of  his 
executor  or  administrator  is  not  taxable;  but  all  transfers 

[861 


made  by  the  latter,  whether  to  trustees,  legatees,  or  other 
persons,  are  taxable. 

8.  The  law  applies  to  the  stock  of  foreign  as  well  as  do- 
mestic corporations  and  to  residents  and  non-residents  alike. 

9.  While  the  law  has  no  extra  territorial  operation, 
nevertheless,  where  it  appears  that  the  transfer  of  the 
stock  on  the  corporate  books  within  this  state  is  essential 
to  render  the  transfer  effectual,  it  subjects  it  to  a  tax 
although  in  all  other  respects  made  without  the  state. 

10.  It  is  the  duty  of  the  person  making  or  effectuating 
the  sale  or  transfer  to  pay  the  required  tax  by  procuring, 
affixing,  and  canceling  the  stamps,  except  that  where  a  sale 
or  transfer  is  shown  only  by  the  books  of  the  corporation, 
the  person  making  the  sale  must  secure,  and  the  corpora- 
tion affix  and  cancel,  the  stamps  to  its  books.    (Sec.  270.) 

11.  Where  the  sale  or  transfer  is  effected  by  the  deliv- 
ery or  transfer  of  a  certificate  the  stamp  must  be  placed 
upon  the  surrendered  certificate.     In  case  of  an  agreement 
to  sell,  or  where  the  sale  is  effected  by  the  delivery  of  the 
certificate  assigned  in  blank,  there  must  be  made  and  de- 
livered by  the  seller  to  the  buyer  a  bill  or  memorandum  of 
such  sale,  to  which  the  stamps  shall  be  affixed  and  canceled. 
This  bill  or  memorandum  with  stamp  attached  must  be 
affixed  to  the  certificate,  or  properly  identified  as  provided 
by  section  276,  when  presented  for  transfer. 

A  strict  compliance  with  these  requirements  will  be  insisted 
upon. 

12.  Every  such  bill  or  memorandum  of  sale,  agreement 
to  sell,  or  sales  ticket  must  show: 

(a)  The  date  of  the  transaction  which  it  evidences. 

(b)  The  name  of  the  seller. 

(c)  The  stock  to  which  it  relates  and  the  number  of 
shares  thereof;  and  all  such  memorandum  of  sale  or 
sales  ticket  as  are  not  used  for  the  purpose  of  transfer 
must  be  kept  by  the  broker  for  two  years  from  their 
respective  dates. 

(d)  And    an    identifying   number   as    provided   by 
section  270. 

13.  All  persons  liable  for  the  payment  of  the  tax  and  all 
persons  acting  as  agents  or  brokers  for  any  such  persons  or 

[87] 


for  the  corporation  whose  stock  is  transferred,  who  in  any 
manner  assists  in  consummating  a  sale  or  transfer  without 
payment  of  the  required  tax,  are  guilty  of  a  misdemeanor. 

14.  Likewise  corporations,  and  persons  acting  as  trans- 
fer agents  for  corporations,  are  forbidden  to  transfer  stock 
on  the  books  of  the  corporation  until  the  required  tax  has 
been  paid;  and  for  a  failure  to  perform  this  duty  they  are 
guilty  of  a  misdemeanor. 

15.  Every  stamp  used  to  denote  the  payment  of  the  tax 
must  be  canceled  by  the  user  by  writing  or  stamping  thereon 
the  initials  of  his  name  and  the  date  upon  which  the  stamp 
is  attached  or  used.     He  must  also  cut  or  perforate  the 
stamp  in  a  substantial  manner  so  that  it  cannot  again  be 
used.    A  failure  so  to  do  renders  the  party  guilty  of  a  mis- 
demeanor. 

16.  Under  no  circumstances  may  a  stamp  erroneously 
attached  to  a  certificate  or  memorandum  be  removed.  An 
adequate  remedy  in  such  cases,  in  the  nature  of  a  refund, 
is  provided  by  section  280  of  the  act. 

17.  Every  broker  is  required  to  keep  a  just  and  true 
book  of  account  in  the  form  prescribed  by  the  Comptroller 
(see  form  designated  "account  book  to  be  kept  by  brok- 
ers" on  page  2)  wherein  shall  be  plainly  and  legibly  re- 
corded in  separate  columns: 

(a)  The  date  of  making  every  sale,  agreement  to  sell, 
delivery  or  transfer  of  shares  or  certificates  of  stock. 

(b)  The  name  of  the  stock  and  the  number  of  shares 
thereof. 

(c)  The  face  value  thereof. 

(d)  The  name  of  the  seller  or  transferrer. 

(e)  The  name  of  the  purchaser  or  transferee. 

(f)  The  identifying  number  of  the  bill  or  memoran- 
dum of  sales  as  provided  by  section  270. 

These  books  must  be  kept  for  a  period  of  at  least  two 
years  subsequent  to  the  date  of  such  entry  made  therein 
and  are  subject  to  examination  by  the  Comptroller  or  his 
representatives  at  all  times  between  10  A.  M.  and  3  p.  M. 
(Saturdays,  Sundays,  and  legal  holidays  excepted.) 

1 8.  Every  corporation  or  its  transfer  agent  shall  keep  a 

[88] 


just  and  true  book  of  account  in  the  form  prescribed  by  the 
Comptroller  (see  form  designated  "account  book  to  be  kept 
by  corporations  and  transfer  agents"  on  page  2),  wherein 
shall  be  plainly  and  legibly  recorded  in  separate  columns: 

(a)  The  date  of  making  every  transfer  of  stock. 

(b)  The  name  of  the  stock  and  the  number  of  shares 
thereof. 

(c)  The  serial  number  of  each  surrendered  certificate. 

(d)  The  same  of  the  party  surrendering  each  certi- 
ficate. 

(e)  The  serial  number  of  the  certificate  issued  in  ex- 
change therefor. 

(f)  The  number  of  shares  represented  by  said  cer- 
tificate. 

(g)  The  name  of  the  party  to  whom  said  certificate 
was  issued. 

(h)     The  evidence  of  the  payment  of  the  tax  as  pro- 
vided by  section  276. 

It  shall  also  keep  and  retain  a  stock  certificate  book  and 
all  surrendered  or  canceled  shares  or  certificates  of  its  stock 
and  memoranda  relating  to  the  sale  thereof  for  a  period  of 
two  years  from  the  date  of  the  delivery  thereof. 

All  such  books  and  papers  are  subject  to  the  examination 
by  the  Comptroller  or  his  representative  at  any  time  be- 
tween the  hours  of  10  A.  M.  and  3  p.  M.  (Saturdays,  Sundays, 
and  legal  holidays  excepted). 

19.  It  is  imperative  that  these  books,  records,  and 
memoranda  be  kept  and  retained  strictly  in  the  form  and 
manner  provided  by  the  statute  and  severe  penalties  are 
imposed  for  a  failure  so  to  do. 

20.  Severe  penalties,  civil  and  criminal,  are  also  pro- 
vided by  the  act  for  the  illegal  sale  or  use  of  stamps,  for 
the  removal  or  re-use  thereof,  for  the  failure  to  pay  the 
tax  imposed,  and  for  the  violation  of  the  other  require- 
ments of  the  statute.     Furthermore,  the  failure  to  pay 
the  tax  constitutes  an  absolute  defense  to  an  action  to 
recover  the  purchase  price  of  the  stock. 

21.  Every  person,  firm,  company,  association,  or  corpora- 
tion engaged  in  whole  or  in  part  in  the  making  or  negoti- 
ating of  sales,  agreements  to  sell,  deliveries,  or  transfers  of 

[89] 


shares  or  certificates  of  stock,  or  conducting  or  transacting 
a  stock  brokerage  business,  shall  within  ten  days  after 
July  I,  1913,  or  within  ten  days  after  engaging  in  such 
business,  file  with  the  State  Comptroller,  either  in  Albany 
or  New  York  City,  a  certificate  setting  forth  the  name 
under  which  such  business  is  or  is  to  be  conducted  or  trans- 
acted and  the  true  and  real  full  names  of  the  person  or  per- 
sons conducting  or  transacting  the  same,  with  the  post- 
office  address  or  addresses  of  said  persons,  or  in  the  event 
of  a  change  in  the  persons  conducting  such  business  or 
change  of  address,  like  certificate  setting  forth  the  facts 
shall  within  ten  days  thereafter  be  filed.  Such  certificate 
shall  be  duly  acknowledged.  A  failure  to  perform  thi& 
duty  is  a  misdemeanor. 

22.  Every  stock  association,  company,  or  corporation 
which  shall  maintain  a  principal  office  or  place  of  business 
within  the  state  or  which  shall  keep  or  cause  to  be  kept 
within  the  State  of  New  York  a  place  for  the  sale,  transfer, 
or  delivery  of  its  stock  shall  within  ten  days  after  April 
7,  1914,  if  such  certificate  shall  not  have  been  theretofore 
filed,  or  within  ten  days  after  engaging  in  or  maintaining  a 
place  for  such  business,  file  with  the  State  Comptroller, 
either  in  Albany  or  New  York  City,  a  certificate  setting 
forth  the  name  of  the  company,  the  place  of  business  and 
when  and  where  incorporated,  or  in  the  event  of  a  change 
in  the  persons  or  change  of  address  like  certificate  setting 
forth  the  facts  shall  within  ten  days  thereafter  be  filed. 
Such  certificates  shall  be  duly  acknowledged  by  the  presi- 
dent or  secretary  of  the  corporation.     A  failure  to  perform 
this  duty  is  a  misdemeanor. 

23.  The  Comptroller  will  be  pleased  at  any  time  to  ad- 
vise interested  parties  as  to  the  provisions  and  require- 
ments of  the  law. 

EUGENE  M.  TRAVIS,  COMPTROLLER 
State  of  New  York 

Albany,  N.  Y. 
WILLIAM  BOARDMAN, 

DEPUTY  COMPTROLLER, 

No.  233  Broadway, 
December  I,  1919.  New  York,  N.  Y. 

190] 


A  Corporation's  Transfer  Rules 

The  transfer  rules  below  are  those  compiled  and  printed 
by  a  leading  corporation  having  its  transfer  office  in  New 
York  City  and  sent  out  in  answer  to  inquiries  respecting 
its  transfer  requirements: 

1.  Registered  securities  of  this  Company,  when  ac- 
companied by  a  proper  form  of  assignment  executed  by  the 
registered  owner  thereof  (or  his  legal  representative)  and 
duly  dated  and  witnessed,  will  be  accepted  for  transfer  if 
(a)  the  signature  of  the  transferer  is  known  at  this  office; 
or  if  (b)  the  signature  of  the  registered  holder  on  the  as- 
signment is  guaranteed  by  some  person,  firm,  or  corporation 
acceptable  to  this  office  as  a  guarantor. 

2.  Securities  registered   in   the  name  of  a  decedent, 
executors  or  administrators,   when   presented   for  trans- 
fer, must  be  accompanied  by  letters  testamentary  bearing 
a  recent  date;  and,  if  there  be  a  will,  a  properly  certified 
copy  of  same  must  be  presented  for  examination.    A 
waiver  from  the  New  York  State  Comptroller  must  also 
be  filed.    When  securities  are  registered  in  the  name  of 
executors   or    administrators,    the    form    of   registration 
should  identify  the  will  or  estate. 

3.  Securities  registered  in  the  name  of  a  corporation, 
society,  or  association,  when  presented  for  transfer,  must  be 
accompanied  by  (a)  a  copy  of  the  resolution  authorizing 
such  transfer;  and  (b)  a  copy  of  the  By-Law,  which  author- 
izes the  execution  of  assignments  of  bonds  or  stock  certifi- 
cates so  registered,  both  certified  by  the  Secretary  thereof 
and  sealed  with  its  seal.    The  certification  should  be  in 
substantially  the  following  form: 

I, Secretary  of  the hereby 

certify  that  the  foregoing  is  a  true  copy  of  a  resolution 

adopted  by  the  Board  of  Directors  of  said 

at  a  meeting  held  on  the day  of 

19. . . .;  that  the  attached  is  a  true  copy  of  a  By-Law 

adopted  by  the  Directors  of  said 

at  a  meeting  held  on  the day  of 

19....;  that  said  meetings  were  duly  called;  that  a 
quorum  of  said  Directors  was  present  at  each  of  said 

[91] 


meetings;  and  that  said  resolution  and  said  By-Law  are 
now  in  full  force  and  effect. 

Such  certificate  must  be  acknowledged  before  a  notary 
or  other  proper  officer,  who  must  certify  that  he  compared 
the  copy  of  the  resolution  and  By-Law  with  the  originals  of 
same  and  that  they  are  true  copies  thereof,  and  that  he 
knew  the  person  making  the  acknowledgment  to  be  the 
officer  in  question. 

4.  When  securities  are  to  be  registered  in  such  form  as 
to  indicate  that  they  are  impressed  by  a  trust,  the  instru- 
ment creating  such  trust  must  be  exhibited  and  a  certified 
copy  thereof  must  be  filed  in  this  office  before  such  registra- 
tion.    Securities  so  registered  may  be  transferred  only 
when  accompanied  by  a  proper  form  of  assignment  exe- 
cuted by  all  of  the  trustees  in  interest,  unless  the  trust 
deed  authorize  less  than  all  to  pass  title. 

5.  Detached   powers  of  assignment  must  accurately 
describe  the  securities  affected;  and  they  should  bear  a  date 
subsequent  to  the  date  of  registration  of  the  securities 
presented. 

6.  A  registration  running  to  two  or  more  persons  (not 
as  trustees,  executors,  administrators,  or  partners)  will  be 
treated  as  an  estate  in  common,  unless  it  appear  conclu- 
sively from  the  form  of  the  registration  that  it  is  a  joint 
estate. 

7.  Signatures    to    assignments    must    correspond    in 
every  respect  with  the  registration  of  the  security  in  ques- 
tion, except  that  in  case  of  a  change  in  the  name  of  the 
registered  holder  subsequent  to  the  date  of  registration  the 

assignment  may  be  signed  thus: formerly 

Or    it    may    be   signed    thus: 

now 

8.  When  securities  are  presented  for  transfer  on  an 
assignment,   executed   under   a   power   of  attorney,   the 
original  must  be  exhibited  and  a  certified  copy  of  same 
must  be  filed  in  this  office. 

9.  The  signatures  of  notaries  not  known  at  this  office 
must  be  verified  by  the  proper  County   Clerk;   and   all 
documents  required  by  the  foregoing  rules  (except  assign- 
ments which  comply  with  Rule  I)  when  executed  beyond 

[921 


the  territory  of  the  United  States,  must  be  verified  by  a 
U.  S.  Consul. 

10.  Certificates  of  stock  left  for  transfer  must  be  ac- 
companied by  Federal  and  New  York  State  transfer  tax 
stamps  of  two  cents  each  per  share. 

11.  When  stock  certificates  are  forwarded  for  transfer 
they  should  be  sent  by  registered  mail  or  express,  and  the 
name  of  the  proposed  transferee  and  attorney  should  be 
omitted  from  the  assignment  until  it  be  decided  that  the 
certificates  are  in  proper  shape  for  transfer. 

Rules  of  New  York  Stock  Exchange  Relating 
To  Transfers 

Article  XXXIII  of  the  By-Laws  and  Rules  of  the  New 
York  Stock  Exchange  relates  to  Transfers  and  Registry. 

It  provides: 

Sec.  i.  Corporations  whose  shares  are  admitted  to 
dealings  upon  the  Exchange  will  be  required  to  maintain  a 
Transfer  Agency  and  a  Registry  Office  in  the  City  of  New 
York,  Borough  of  Manhattan.  Both  the  Transfer  Agency 
and  the  Registrar  must  be  acceptable  to  the  Committee 
on  Stock  List,  and  the  Registrar  must  file  with  the  Secre- 
tary of  the  Exchange  an  agreement  to  comply  with  the 
requirements  of  the  exchange  in  regard  to  registration. 

Sec.  2.  When  a  corporation  purposes  to  increase  its 
authorized  capital  stock,  thirty  days*  notice  of  such  pro- 
posed increase  must  be  officially  given  to  the  Exchange, 
before  such  increase  may  be  admitted  to  dealings. 

Sec.  3.  When  the  capital  stock  of  a  corporation  is  in- 
creased through  conversion  of  convertible  bonds,  already 
listed,  the  issuing  corporation  shall  give  immediate  notice 
to  the  Exchange  and  the  Committee  on  Stock  List  may, 
thereupon,  authorize  the  registration  of  such  shares  and 
add  them  to  the  list. 

Sec.  4.  The  Governing  Committee  may  suspend  deal- 
ings in  the  securities  of  any  Corporation  previously  ad- 
mitted to  quotation  upon  the  Exchange,  or  it  may  sum- 
marily remove  any  securities  from  the  list. 

Sec.  5.    After  the  admission  of  a  security  to  dealings 

[93] 


upon  the  Exchange  no  change  in  the  form  of  certificate, 
or  of  the  Transfer  Agency  or  the  Registrar  of  shares,  or  of 
the  Trustee  of  bonds  shall  be  made  without  the  approval 
of  the  Committee  on  Stock  List. 

Rules  for  Delivery  of  Securities 

Following  are  the  Rules  for  Delivery  prescribed  by  the 
Committee  on  Securities  of  the  New  York  Stock  Exchange: 

I.  Securities  admitted  to  dealings  upon  the  New  York 
Stock  Exchange  Registered  and  Transferable  in  the 
Borough  of  Manhattan,  City  of  New  York,  in  conformity 
with  the  requirements  of  Section  I,  Art.  XXXIH  of  the 
"Constitution,  are  a  delivery: 

(a)  Certificates  of  Stock  for  100  shares  or  odd  lots 
aggregating   100  shares,  with   irrevocable  Assignment 
for  each  Certificate,  and  in  the  name  of  a  member  or  a 
member's  firm,  registered   and  doing  business  in  the 
Borough    of   Manhattan.     Certificates    for    the    exact 
amount  or  aggregating  the  amount  of  an  odd  lot. 

(b)  Or  with  irrevocable  Assignment  witnessed  by  a 
member;  or  correctness  of  signature  guaranteed  by  a 
member  or  a  member's  firm. 

(c)  Or  with  irrevocable  Assignment  and  each  Power 
of  Substitution  witnessed  by  a  member  or  correctness 
of  signature  guaranteed  by  a  member  or  a  member's 
firm. 

(d)  Coupon  Bonds  payable  to  Bearer,  in  denomina- 
tions of  £500  or  £1,000  each,  with  proper  coupons  of  the 
bond's  number  securely  attached.     Small  bonds,  under 
$500,  or  large  bonds  over  $1,000,  only  in  special  trans- 
actions, except  that  in  transactions  in  United  States 
Victory  or  Liberty  Loan  coupon  bonds,  denominations 
of  #10,000  when  such  pieces  are  exchangeable  for  $1,000 
or  #500  denominations,  may  be  delivered. 

The  money  value  of  a  missing  coupon  may  be  sub- 
stituted only  with  the  consent  of  the  Committee  on 
Securities  for  each  delivery. 
.    Coupon  Bonds  exchangeable  into  Registered  Bonds 

[94] 


and  Convertible  Bonds  must  carry  all  unpaid  and  un- 
matured  Coupons. 

(e)  Registerable  Coupon  Bonds  in  denominations  of 
$500  or  #1,000  registered  to  Bearer,  or  when  transfer 
books  are  closed  with  an  Assignment  to  Bearer  for  each 
bond  by  a  member  or  his  firm  or  witnessed  by  a  mem- 
ber, or  the  correctness  of  the  signature  guaranteed  by  a 
member  or  his  firm,  registered  and  doing  business  in  the 
Borough  of  Manhattan. 

(f)  Registered  Bonds  in  denominations  not  exceed- 
ing £10,000  properly  assigned. 

2.  Securities  contracted  for  in  amounts  exceeding  100 
shares  of  Stock  or  $10,000  in  Bonds,  may  be  tendered  in 
lots  of  100  shares  of  Stock  or  $10,000  in  Bonds,  or  any 
multiple  of  either,  and  must  be  accepted  and  paid  for  as 
delivered. 

3.  Securities  with  Assignment,  or  Power  of  Substitu- 
tion, signed  by  an  Insolvent,  are  not  a  delivery.     During 
the  close  of  transfer  books,  such  securities  held  by  other 
than  the  insolvent,  are  a  delivery  if  accompanied  by  an 
affidavit  for  each  certificate  or  bond,  that  said  securities 
were  held  on  a  date  prior  to  the  insolvency. 

Securities  with  Assignment  or  with  Power  of  Substitu- 
tion, guaranteed  by  a  member  or  his  firm,  suspended  for 
Insolvency,  are  not  a  delivery  and  must  be  reguaranteed 
by  a  solvent  member  or  his  firm. 

4.  Securities  with  an  Assignment  or  a  Power  of  Sub- 
stitution executed  by  a  firm  that  has  ceased  to  exist  are 
not  a  delivery,  except  during  the  closing  of  the  transfer 
books.    The  assignment  must  be  proved  or  acknowledged 
before  a  Notary  Public.     (Form  No.  3,  and  for  witness 
No.  9.) 

Securities  with  either  the  Assignment  or  any  Power  of 
Substitution  witnessed  by  a  deceased  person  are  not  a 
delivery. 

5.  Securities  assigned,  or  a  Power  of  Substitution  by  a 
firm  that  has  dissolved  and  is  succeeded  by  one  of  the  same 
name,  are  a  delivery,  when  the  new  firm  shall  have  signed 
the  statement  "Execution  guaranteed,"  under  a  date  sub- 
sequent to  the  formation  of  the  new  firm. 

[95] 


6.  Securities  in  the  name  of  a  corporation  or  an  institu- 
tion, or  in  a  name  with  official  designation,  are  a  delivery 
only  when  the  statement,  "proper  papers  for  transfer  filed 
by  assignor"  is  placed  on  each  assignment  and  signed  by 
the  Transfer  Agent. 

7.  Securities  with  an  Assignment  or  a  Power  of  Sub- 
stitution signed  by  a  deceased  person,  Trustees,  Guardians, 
Infants,  Executors,  Administrators,  Assignees,  and  Receiv- 
ers in  Bankruptcy,  Agents  or  Attorneys,  are  not  a  delivery. 

8.  Securities  assigned  by  a  Married  Woman  are  not  a 
delivery.    A  joint  assignment  and   acknowledgment   by 
husband  and  wife  before  a  Notary  Public  will  make  such 
security  a  delivery  only  while  the  transfer  books  are  closed. 
(Form  No.  4.) 

9.  Securities  in  the  name  of  an  Unmarried  Woman, 
with  the  prefix  "Miss,"  are  a  delivery  without  notarial 
acknowledgment,  when  signed  "Miss." 

10.  Securities  in  the  name  of  an  Unmarried  Woman 
(without  the  prefix  "Miss"),  or  a  Widow  are  a  delivery 
only   when   the   Assignment   is   acknowledged   before   a 
Notary  Public.    (Form  No.  5.) 

11.  Securities  of  a  Company  whose  transfer  books  are 
closed  indefinitely  for  any  reason,  legal  or  otherwise,  the 
Assignment   and   each   Power  of  Substitution   must   be 
acknowledged  before  a  Notary  Public.     (Forms  Nos.  2,  3 ; 
for  witness,  8  and  9.) 

12.  Securities  in  the  name  of  Foreign  Residents  are  not 
a  delivery  on  the  day  the  transfer  books  are  closed  for 
payment  of  a  Dividend  or  Registered  interest,  and  rec- 
lamation can  only  be  made  on  that  day. 

13.  Securities  in  the  name  of  Foreign  Residents  must 
be  accompanied  by  an  acknowledgment  before  a  United 
States  Consul  or  Morgan  Grenfell  &  Co.,  London,  when 
required  by  transfer  agents. 

Several   companies   having   transfer   offices   at  Grand 
Central  Station,  New  York,  make  this  requirement. 

14.  Certificate  of  stock  on  which  the  name  of  a  trans- 
feree has  been  filled  in  error  may  be  made  a  delivery  during 
the  closing  of  the  transfer  books  by  ruling  of  the  Com- 
mittee on  Securities.    Necessary  form  of  release,  cancella- 

[96] 


tion,  and  reassignment  will  be  furnished  on  application  to 
the  Committee  on  Securities. 

15.  An  endorsement  by  a  member  or  his  firm  registered 
and   doing   business   in   the   Borough   of  Manhattan   of 
(or  the  signature  as  a  witness  by  such  a  member  of  a 
signature  to)  an  Assignment  or  a  Power  of  Substitution, 
is  a  guarantee  of  its  correctness.     Each  Power  of  Substitu- 
tion, as  well  as  the  Assignment,  must  be  so  guaranteed,  or 
witnessed. 

1 6.  The  Receiver  of  Stock  may  demand  delivery  by 
transfer  when  the  transfer  books  are  open,  and  must  give 
ample  time  in  which  to  make  transfer.    The  Seller  may 
demand  payment  for  the  securities  at  the  time  and  place 
of  transfer.    The  Seller  may  make  delivery  by  transfer 
when  personal  liability  attaches  to  ownership. 

17.  When  a  claim  is  made  for  a  dividend  on  Stock  after 
the  transfer  books  have  been  closed,  the  party  in  whose 
name  the  stock  stands  may  require  from  the  claimant  pres- 
entation of  the  certificate,  a  written  statement  that  he  was 
the  holder  of  the  Stock  at  the  time  of  the  closing  of  the 
books,  a  guarantee  against  any  future  demand  for  the  same, 
and  the  privilege  to  record  on  the  certificate  evidence  of 
the  payment  by  Cash  or  Due  Bill. 

1 8.  "Coupon  Bonds  issued  to  Bearer,  having  an  endorse- 
ment upon  them  not  properly  pertaining  to  them  as  a  security, 
must  be  sold  specifically  as  'Endorsed  Bonds,'  and  are  not  a 
delivery,  except  as  'Endorsed  Bonds'" 

Extract  from  Resolutions  of  Governing  Committee,  adopted 
May  23, 1883. 

A  definite  name  of  a  person,  firm,  corporation,  an  as- 
sociation, etc.,  such  as  "John  Smith,"  "Brown,  Jones  & 
Co.,"  "Consolidated  Bank,"  appearing  upon  a  Coupon 
Bond,  and  not  placed  there  for  any  purpose  of  the  Com- 
pany by  any  of  its  officers,  implies  ownership,  and  is  an 
"Endorsed  Bond"  under  the  above  resolution. 

19.  Any  endorsement  on  a  Coupon  Bond,  stating  that 
it  has  been  deposited  with  a  state  for  bank  circulation  or 
insurance    requirement,    may    be    released    and    release 
acknowledged  before  a  Notary  Public;  it  will  then  be  a  de- 
livery as  a  "Released  Endorsed  Bond." 

[97] 


Rules  and  Regulations  Governing  the  Trans- 
fer of  Liberty  Bonds  and  Victory  Notes 

Following  are  certain  of  the  rules  and  regulations  pre- 
scribed by  Treasury  Department  Circular  No.  141,  promul- 
gated September  15,  1919: 

Transfers  of  Registered  Bonds  and  Notes 

II.  Assignments. — In  order  to  effect  the  transfer  of 
a  registered  bond  or  note,  the  registered  holder  thereof, 
or  some  one  duly  authorized  to  act  for  him,  must  go  before 
one  of  the  officers  authorized  by  the  Secretary  of  the  Treas- 
ury to  witness  assignments,  must  establish  his  identity, 
and  in  the  presence  of  such  witnessing  officer  must  execute 
an  assignment  on  the  form  appearing  on  th ;  back  of  the 
bond  or  note.  No  alterations  or  erasures  should  be  made 
in  assignments;  assignments  bearing  alterations  or  erasures 
not  explained  to  the  satisfaction  of  the  Treasury  Depart- 
ment will  be  rejected.  Detached  assignments  will  not  be 
accepted.  Assignments  of  registered  bonds  and  notes  should 
be  made  to  the  transferee,  or,  if  desired,  to  the  Secretary 
of  the  Treasury  for  transfer  into  the  name  of  the  trans- 
feree, who  should  be  named.  Assignments  must  not  be  made 
to  "The  Secretary  of  the  Treasury  for  transfer,"  or  to  "The 
Secretary  of  the  Treasury."  Registered  bonds  and  notes 
may  be  assigned  in  blank,  but  when  so  assigned  are  in  effect 
payable  to  bearer  and  lack  the  protection  which  registration 
affords.  If  the  assignment  is  made  by  any  one  other  than 
the  registered  owner,  appropriate  evidence  of  the  authority 
of  such  person  must  be  produced  and  must  accompany  the 
bond  or  note,  unless  already  on  file  with  the  Secretary  of 
the  Treasury.  Powers  of  attorney  to  assign  registered 
bonds  or  notes  must  be  acknowledged  in  the  presence  of 
one  of  the  officers  authorized  to  witness  assignments. 
Registered  bonds  or  notes  presented  for  transfer  or  ex- 
change with  assignments  which  are  imperfect  or  not  sup- 
ported by  the  required  authority,  will  be  passed  for  transfer 
or  exchange  only  when  the  imperfections  have  been  cor- 
rected or  the  required  authority  furnished;  if  in  the  mean- 

[98] 


time  the  transfer  books  close  in  anticipation  of  an  interest 
payment,  action  with  respect  to  any  such  transfer  or  ex- 
change will  not  be  taken  until  the  transfer  books  reopen, 
and  interest  accordingly  will  be  paid  to  the  holder  of 
record  at  the  time  the  transfer  books  closed.  Reference 
is  hereby  made  to  the  Treasury  Department  regulations 
in  force  in  relation  to  United  States  bonds  for  further 
details  as  to  assignments  of  registered  bonds  and  notes. 

12.  Assignments  in  case  of  death  of  registered  owner. — 
In  case  of  the  death  of  the  holder  of  registered  bonds  or 
notes,  if  the  decedent  leave  a  will  which  is  duly  admitted 
to  probate,  or  die  intestate  and  the  estate  is  administered 
in  a  court  of  competent  jurisdiction,  assignment  may  be 
made  only  by  the  duly-appointed  representative  of  the 
estate.  Assignments  made  by  executors  or  administra- 
tors, or  other  duly-appointed  representatives,  must  be 
supported  by  a  duly-executed  certificate  under  seal  from 
the  court  appointing  such  representative,  dated  not  more 
than  90  days  prior  to  the  execution  of  the  assignments, 
showing  the  appointment  and  qualification  of  such  repre- 
sentative and  that  the  appointment  is  still  in  force,  or,  in 
the  absence  of  such  a  certificate,  by  duly-certified  copies 
of  the  representative's  letters  of  appointment.  If  the 
decedent  die  intestate  and  the  gross  value  of  the  estate, 
both  real  and  personal,  does  not  exceed  $250  in  value,  or 
the  estate  of  such  decedent  is  expressly  exempt  from  ad- 
ministration under  the  laws  of  the  state  of  the  decedent's 
domicile,  assignments  by  the  person  or  persons  entitled 
to  the  bonds  or  notes  under  the  laws  of  the  state  of  the 
decedent's  domicile  may  be  recognized,  without  ad- 
ministration, upon  presentation  of  proof  satisfactory  to 
the  Secretary  of  the  Treasury  that  the  funeral  expenses  and 
debts  of  the  decedent  have  been  paid  or  provided  for, 
and  that  such  person  or  persons  are  entitled  to  the  bonds 
or  notes.  Such  proof  will,  in  general,  include  affidavits 
of  the  persons  claiming  to  be  entitled,  setting  forth  all  the 
facts  in  detail,  supported  by  affidavits  of  at  least  two  dis- 
interested persons,  and  by  the  official  certificate  or  other 
proof  of  death  of  the  registered  holder;  and  in  cases  where 
any  of  the  persons  entitled  are  minors  or  under  disability  no 

[99] 


assignment  will  be  permitted  unless  to  them,  or  upon  com- 
pliance with  the  Treasury  Department  regulations  as  to 
assignments  by  or  for  such  persons.  The  Secretary  of  the 
Treasury  may  also  require  in  any  such  case  a  bond  of 
indemnity  with  satisfactory  sureties. 

13.  Assignments  in  case  of  disability  of  registered  owner. 
— In  case  of  mental  disability  or  other  legal  incompetency 
of  the  holder  of  registered  bonds  or  notes,  assignments 
may  be  macle  by  the  guardian  or  other  legally  appointed 
representative  of  the  holder  upon  presenting  proof  satis- 
factory to  the  Secretary  of  the  Treasury  of  his  appoint- 
ment and  authority  to  assign  such  bonds  or  notes. 

14.  Assignments  for  minors. — Bonds  or  notes  registered 
in  the  name  of  a  minor  or  of  a  guardian  for  a  minor  may  be 
assigned  during  minority  only  by  the  guardian  legally 
appointed  by  a  court  of  competent  jurisdiction,  or  other- 
wise legally  qualified,  or  pursuant  to  order  or  decree  of  a 
court  of  competent  jurisdiction;  provided,  however,  that 
in  cases  where  such  bonds  or  notes  have  been  purchased 
by  the  natural  guardian  of  the  minor  out  of  his  own  funds 
as  a  gift  to  the  minor,  or  otherwise  purchased  for  the  benefit 
of  the  minor,  and  registered  in  the  name  of  the  minor,  or 
in  the  name  of  such  natural  guardian  for  the  minor,  and  the 
entire  gross  value  of  the  minor's  estate,  both  real  and  per- 
sonal, does  not  exceed  $250,  assignments  by  the  natural 
guardian  for  transfer  or  for  exchange  into  coupon  bonds 
or  notes,  may  be  recognized  upon  presentation  of  proof 
satisfactory  to  the  Secretary  of  the  Treasury  that  the  pro- 
ceeds of  the  bonds  or  notes  so  assigned  are  necessary,  and 
are  to  be  used  for  the  support  or  education  of  the  minor. 
The  Secretary  of  the  Treasury  may  also  require  in  any  such 
case  a  bond  of  indemnity  with  satisfactory  sureties. 

15.  Bonds  or  notes  registered  in  the  names  of  two  or  more 
persons.     When    bonds   or   notes    are   registered    in   the 
names  of  two  or  more  persons,  in  substantially  the  form 
"John  Jones  and  Mary  Jones,"  or  "John  Jones  or  Mary 
Jones,"  or  "John  Jones  and  Mary  Jones,  or  the  survivor," 
the  bonds  or  notes  are  deemed  to  Be  held  in  joint  ownership, 
with  right  of  survivorship,  and  during  the  lives  of  the  co- 
owners  the  Treasury  Department  will  require  assignments 

[lool 


by  all  in  cases  of  transfer.  Interest  will-be  .paid,  to  any  one 
of  such  co-owners.  In  case  of  fche  Je^th^  of.'  any  &ic|i 
co-owner,  the  Department  will,  upon  satisfactory  proof 'of 
death  and  survivorship,  recognize  the  survivor  or  survivors 
as  owners,  and  will  honor  assignments  by  such  survivor  or 
survivors  without  regard  to  any  administration  of  the  estate 
of  the  deceased  co-owner.  Bonds  and  notes  should  not  be 
registered  in  the  form  "John  Jones  or  Mary  Jones,  or 
either  of  them,"  but  if  so  registered,  assignments  by  all 
the  co-owners  will  be  required  in  cases  of  transfer,  and 
no  right  of  survivorship  will  be  recognized. 

1 6.  Officers  authorized  to  witness  assignments. — The 
following  officers  are  authorized  to  witness  the  execution 
and  acknowledgment  of  the  assignment  of  United  States 
registered  bonds  and  notes: 

Judges  and  clerks  of  United  States  Courts; 

United  States  district  attorneys; 

United  States  collectors  of  customs; 

United  States  collectors  of  internal  revenue; 

Assistant  treasurers  of  the  United  States  at  Boston, 
New  York,  Philadelphia,  Baltimore,  Cincinnati,  Chicago, 
St.  Louis,  New  Orleans,  and  San  Francisco. 

Executive  officers  of  the  Federal  Reserve  Banks  located 
in  Boston,  New  York,  Philadelphia,  Cleveland,  Rich- 
mond, Atlanta,  Chicago,  St.  Louis,  Minneapolis,  Kansas 
City,  Dallas,  and  San  Francisco,  and  of  the  branches 
thereof; 

Executive  officers  (authorized  to  perform  acts  attested 
under  the  seal  of  their  respective  institutions)  of  incorpor- 
ated banks  and  trust  companies  in  the  United  States  (in- 
cluding incorporated  savings  banks),  whether  or  not  mem- 
bers of  the  Federal  Reserve  System,  and  the  branches 
thereof,  domestic  and  foreign,  and  of  incorporated  banks 
and  trust  companies  in  Alaska  and  the  insular  possessions 
of  the  United  States  doing  business  under  Federal  charter 
or  organized  under  Federal  law;  and,  in  addition,  mana- 
gers of  branches  of  such  incorporated  banks  and  trust 
companies  whose  signatures  are  certified  to  the  Treasury 
Department  under  the  seal  of  the  parent  institution; 

Commanding  officers  of  the  Army,  Navy,  and  Marine 

[101] 


Corps  of  the  United  States  (for  members  of  the  military 
;iOid  naval  establishments  of  the  United  States); 

Diplomatic  and  consular  representatives  and  commercial 
agents  of  the  United  States  on  duty  abroad; 

Registered  bonds  and  notes  may  also  be  assigned  at  the 
Treasury  Department,  Washington.  If  in  a  foreign  coun- 
try, assignments  should  be  made  before  a  diplomatic  or 
consular  representative  or  commercial  agent  of  the  United 
States;  if  no  such  officer  is  accessible,  the  assignment  may 
be  made  before  a  notary  public,  or  other  competent  officer, 
but  his  official  character  and  jurisdiction  must  be  duly  certi- 
fied to  the  Treasury  Department. 

17.  A  notary  public,  a  justice  of  the  peace,  or  a  commis- 
sioner of  deeds  is  not  authorized  to  witness  an  assignment. — 
In  the  event  that  none  of  the  officers  authorized  to  witness 
assignments  is  readily  accessible,  the   Secretary  of  the 
Treasury  will,  upon  application,  make  special  provision  for 
the  particular  case.     In  all  cases  the  witnessing  officer 
must  affix  to  the  assignment  his  official  signature,  title,  ad- 
dress and  seal,  and  the  date  of  the  assignment;  officers 
of  incorporated  banks  and  trust  companies   must  affix 
the  seal  of  the  bank  or  trust  company.     If  the  officer  does 
not  possess  an  official  seal  that  fact  should  be  made  known 
and  attested.    Witnessing  officers  must  require  positive 
identification  of  assignors  as  known  and  responsible  per- 
sons.    No  officer  of  the  United  States,  at  home  or  abroad, 
is  authorized  to  charge  a  fee  for  witnessing  the  assignment 
of  United  States  registered  bonds  or  notes,  and  banks  and 
trust  companies  generally  impose  no  charge  for  the  ser- 
vice. 

1 8.  Presentation  of  registered  bonds  or  notes  for  transfer. 
— After  the  assignment  of  a  registered  bond  or  note  has 
been  duly  executed,  the  bond  or  note  should  be  forwarded, 
at  the  risk  and  expense  of  the  owner,  direct  to  the  Secre- 
tary of  the  Treasury,  Division  of  Loans  and  Currency, 
Washington,  D.  C.,  or  to  a  Federal  Reserve  Bank,  accom- 
panied by  specific  instructions  for  the  issue  and  delivery  of 
the  new  bond  or  note,  which  must  in  all  cases  be  in  accord- 
ance with  the  assignments.     (Use  Form  L.  &  C.,  144, 
hereto  attached,  copies  of  which,  or  of  a  substantially  simi- 

[102] 


lar  form,  may  be  obtained  from   any  Federal  Reserve 
Bank  or  from  the  Treasury  Department.) 

Miscellaneous  Provisions  Concerning 
Registered  Bonds  and  Notes 

'  19.  Change  of  name  or  correction  of  name  of  owners  of 
f-egistered  bonds  or  notes.  Assignments  to  cover  change 
of  name  or  correction  of  name  of  the  owner  must  be 
witnessed  and  acknowledged  as  provided  in  the  case  of 
transfers.  If  a  bond  or  note  stands  in  the  maiden  name 
of  a  woman  who  has  since  married  and  it  is  desired  (i)  to 
transfer  the  bond  or  note  to  another  person,  or  (2)  to 
correct  the  registration  record,  the  bond  or  note  should  be 
appropriately  assigned  in  such  manner  that  both  maiden 
name  and  married  name  appear  in  the  signature  to  the  as- 
signment; e.  g.,  Miss  Mary  Jones,  now  by  marriage  Mrs. 
Mary  Brown.  A  married  woman's  personal  (legal)  name 
must  be  used  and  not  her  husband's.  If  an  error  has  been 
made  in  inscribing  the  name  of  the  owner  of  a  registered 
bond  or  note,  the  owner  should  return  the  bond  or  note  to 
the  Secretary  of  the  Treasury,  Division  of  Loans  and 
Currency,  for  correction.  If  the  directions  for  the  issue 
of  such  bond  or  note  were  transmitted  by  a  bank  or  trust 
company  or  through  a  Federal  Reserve  Bank,  the  bond  or 
note  should  be  returned  by  the  owner  through  such  bank 
or  trust  company,  or  Federal  Reserve  Bank,  accompanied 
by  full  explanation  and  instructions.  Bonds  or  notes  so 
returned  for  correction  should  be  assigned  to  the  owner 
in  the  correct  name  and  assigned  by  him  in  the  name  as  it 
appears  on  the  face  of  the  bond  or  note.  If  the  correction 
involves  a  substantial  change  in  name,  the  Department 
may  require  additional  certification. 

Lost,  Stolen,  or  Destroyed  Bonds  or  Notes 

23.  Coupon  bonds  and  notes  are  payable  to  bearer  and 
title  thereto  passes  by  delivery;  if  they  are  lost  or  stolen 
the  Treasury  Department  can  grant  no  relief  under  ex- 
isting law,  but  if  destroyed,  duplicates  may  be  issued.  In 


case  of  the  loss,  theft,  or  destruction  of  registered  bonds  or 
notes,  the  bonds  or  notes  may  be  replaced,  unless  assigned 
in  blank.  All  cases  of  lost,  stolen,  or  destroyed  bonds  or 
notes  should  be  reported  to  the  Secretary  of  the  Treasury, 
Division  of  Loans  and  Currency,  Washington,  D.  C.  The 
Treasury  Department  assumes  no  responsibility  whatever 
with  respect  to  coupon  bonds  or  notes  so  reported,  but  if 
subsequently  the  coupon  bonds  or  notes  are  presented 
for  exchange  or  otherwise,  attempt  will  be  made  to  advise 
the  person  who  reported  the  loss.  In  cases  of  registered 
bonds  or  notes  reported  lost,  stolen,  or  destroyed,  caveats 
will  be  entered  against  the  transfer,  exchange,  or  payment 
of  such  bonds  or  notes.  In  the  event  that  bonds  or  notes 
reported  lost,  stolen,  or  destroyed  subsequently  are  re- 
covered, report  thereof  should  be  made  to  the  Secretary 
of  the  Treasury.  The  law  requires  with  respect  to  claims 
for  the  issue  of  duplicates  of  destroyed  coupon  bonds 
or  notes  that  the  bonds  or  notes  shall  be  identified  by  num- 
ber and  description;  accordingly,  all  holders  of  coupon 
bonds  or  notes  should  keep  a  careful  and  authentic  record 
of  their  holdings.  Full  information  with  respect  to  sub- 
mitting claims  for  the  issue  of  duplicate  bonds  or  notes 
may  be  had  upon  application  to  the  Secretary  of  the 
Treasury,  Division  of  Loans  and  Currency,  Washington, 
D.  C. 

Other  Miscellaneous  Provisions 

//  the  assignor  is  a  corporation,  some  officer  of  such  cor- 
poration should  execute  the  assignment,  and  this  office 
should  be  furnished  with  a  certified  copy  of  a  resolution 
passed  by  the  Board  of  Directors  of  the  corporation.  A 
resolution  along  the  lines  indicated  in  Forms  2406  and 
2407  will  meet  the  requirements  of  the  Department. 

//  the  assignor  is  a  co-partnership,  some  member  of  the 
firm  should  execute  the  assignment,  affixing  his  signature 
thereto  in  the  following  manner:  "Smith,  Jones  &  Co., 

a  co-partnership,  by a  member  of  the 

firm." 

//  the  assignor  is  an  unincorporated  firm,  having  a  sole 

[104] 


owner,  the  assignment  should  be  executed  by  such  sole 
owner  in  the  following  manner:  "John  Brown  Hardware 
Co.,  unincorporated,  by ,  sole 


Bonds  Standing  in  the  Name  of  Churches, 
Lodges,  Associations,  etc. 

If  incorporated,  it  is  requested  that  this  office  be  fur- 
nished with  a  resolution  of  its  governing  body  authorizing 
certain  officers  to  make  assignments. 

If  not  incorporated  but  having  a  constitution  or  by- 
laws, it  is  requested  that  you  furnish  this  office  with  an 
extract  from  so  much  of  the  constitution  or  by-laws  as 
shows  where  the  authority  to  deal  with  the  funds  of  that 

is  vested  in  the  governing  body,  a 

resolution  from  that  governing  body  similar  to  the  one 
requested  above  should  be  furnished.  The  extract  must 

be  sworn  to  by  two  executive  officers  of  the , 

one  of  whom  must  have  custody  of  the  records  thereof, 
before  a  notary  public. 

On  the  other  hand,  if  this is 

not  incorporated  and  has  no  constitution  or  by-laws,  in 
lieu  of  the  papers  referred  to  above  you  should  furnish 
this  office  with  a  sworn  extract  from  the  minutes  of  a 

meeting  of  this ,  at  which  it  was  voted  to 

authorize ,  to  assign  this  bond.  This 

extract  must  be  sworn  to  in  the  same  manner  as  the  extract 
above  referred  to. 


THE  END 


[105] 


INDEX 

References  are  to  pages 


Administrators,    definition    of, 

36;     transfers     by,     36-38; 

various  kinds  of,  36.  istered  as  to  principal  only, 

Assignees       in       bankruptcy,          73-74;   as  to   principal   and 

transfers  by,  23. 
Assignment,    see     Powers    of 

Assignment. 
Associations,     unincorporated, 

transfers  by,  28. 
Attorneys,  definition  of,  22. 


Bonds,  lost  or  destroyed,  75-76 
Bonds,  registered,  71-75;  reg- 


interest,  74. 
Bonds,  transfer  of,  applicabil- 
ity of  Inheritance  Transfer 
Tax  Acts,  75. 


Attorneys-in-fact,  definition  of, 
22;  transfers  by,  22. 

Bangor  Electric  Light  &  Power 
Co.  vs.  Robinson,  66. 

Bearer  bonds,  exchange  of,  for 
registered,  74;  how  trans- 
ferred, 71. 

Benwell  vs.  Newark,  71,  72. 

Bona  fide  purchaser,  title  of, 
to  stolen  or  lost  certificate  of 
stock,  61-68. 

Bonds,  corporate,  classes  of,  68; 
contents  of,  68;  definition  of, 
68;  negotiability  of,  68-69; 
title  of  bona  fide  purchaser 
of,  69;  transfer  of,  68-75; 
Uniform  Negotiable  Instru- 
ments Law  applicable  to,  70. 

Bonds,  coupon,  70-71. 

Bonds,  discharge  of,  from  re- 
gistry, 74. 

Bonds  of  indemnity,  59-61. 


Capital  stock,  definition  of,  4. 

Chesapeake  &  Ohio  Canal  Co. 
vs.  Blair,  76. 

Chester  County  Guarantee 
Trust  &  Safe  Deposit  Co.  vs. 
Securities  Co.,  72,  76. 

Common  stock,  definition  of,  4. 

Corporations,  classes  of,  3; 
definition  of,  3;  duty  to  pro- 
tect against  erroneous  or 
wrongful  transfers,  46;  lia- 
bility of,  for  erroneous  or 
wrongful  transfers,  46-47; 
liability  of  for  refusal  to 
transfer,  45;  transfers  by,  26. 

Corporate  bonds,  transfer  of, 
68-75. 

Coupon  bonds,  definition  of, 
70;  negotiability  of,  70; 
payable  to  bearer,  how  trans- 
ferred, 70-71. 

Cronin  vs.  Patrick  County,  72. 


Damages,    for    erroneous    or 


[107] 


wrongful  transfer,  47;  for  re- 
fusal to  transfer,  45. 
Date,  of  power  of  assignment, 

1S- 

Debts,  of  estate,  proof  of  pay- 
ment of,  32-33. 

Estoppel,  title  by,  63-67. 

Executors,  definition  of,  28; 
power  of  sale  by,34;  sale  by,  to 
themselves  individually,  33; 
sale  by,  without  court  order, 
31-32;  transfers  by,  28-36; 
when  trustees  also,  capacity 
in  which  acting,  34;  when 
trustees  also,  termination  of 
executorial  powers,  35. 

Farmers'  Bank  vs.  The  Diebold 
Safe  &  Lock  Co.,  66. 

Federal  Estate  Tax,  computa- 
tion of,  57-58;  contrasted 
with  New  York  Inheritance 
Transfer  Tax,  57;  provisions 
of,  56-58. 

Federal  Stock  Transfer  Tax, 
amount  of,  50;  how  payment 
is  denoted,  50;  penalty  for 
violation  of,  50;  provisions  of, 
49-50;  transfers  covered  by, 

Fiduciaries,  classes  of,  28; 
transfers  by,  28-44. 

Fiduciaries,  joint,  action  by,  43. 

Forged  or  unauthorized  trans- 
fers, bona  fide  purchase  of 
stock  under,  63-64. 

Forms,  certificate  of  authority 
to  execute  assignment,  27; 
instruments  of  assignment, 
9;  notarial  acknowledgments, 
18;  pow«r  of  assignment  of 
registered  bonds,  73;  power 
of  substitution,  15;  stock  cer- 
tificate, 5. 


Guarantee,  of  signature,  17. 
Guardians,    classes    of,    43-44; 

definition  of,  43;  sale  by,  44; 

transfers  by,  43-44. 

Infants,  transfers  by,  22. 

Inheritance  Tax  Waivers,  de- 
finition of,  51;  by  New  York 
State  Comptroller,  51. 

Insane  persons,  transfers  by,  22. 

Interest,  payment  of,  on  regis- 
tered bonds,  71. 

Joint  fiduciaries,  action  by,  43. 
Joint  tenancy,  definition  of,  24; 

distinguished    from   tenancy 

in  common,  23-24. 

Knox  vs.  Eden  Musee  Co.,  64. 

Letters  of  administration,  de- 
finition of,  37. 

Letters  testamentary,  defini- 
tion of,  28. 

Liberty  bonds,  transfer  of,  74; 
rules  and  regulations  as  to 
transfer,  98-105. 

Lost  or  destroyed  bonds,  rights 
of  owner,  75-76. 

Lost  or  destroyed  stock  certi- 
ficates, 58-61. 

Married  women,  sale  of  stock 
to  husband,  21;  transfers  by, 
21. 

Membership  corporations, 
transfers  by,  28. 

Miller  vs.  Doran,  67. 

Miller  vs.  Rutland  &  W.  R. 
Co.,  76. 

Moore  vs.  Metropolitan  Na- 
tional Bank,  64. 

National  Safe  Deposit  Savings 

&  Trust  Co.  vs.  Hibbs,  64. 
Negligence,    estoppel    by,    as 


108 


against  owner  of  stolen  or 
lost  certificates,  64^66. 

Negotiability,  definition  of,  69; 
results  of,  69. 

Negotiable  Instruments  Law, 
69-70. 

New  York  Inheritance  Tax, 
52-56;  notice  to  Comptroller 
of  intended  transfer,  55-56; 
payment  of,  54-55;  rates  of, 
53-54;  transfers  covered  by, 
52-53;  transfers  exempted, 
53;  tax  on  investments,  54. 

New  York  State  Comptroller, 
rulings  on  tax  on  transfers  of 
stock,  86-90. 

New  York  Stock  Exchange, 
rules  for  delivery  of  securi- 
ties, 94-97;  rules  relating  to 
transfers,  93-94; 

New  York  Stock  Transfer  Tax, 

amount  of,  48;  provisions  of, 

48-49;  penalty  forviolation  of, 

48;  transfers  covered  by,  49. 

Non-stock  corporations,  defini- 
tion of,  3. 

Notarial  acknowledgments,  18. 

Partnerships,  general,  defini- 
tion of,  25;  transfers  by,  25. 

Personal  property,  of  decedent, 
title  to,  29. 

Powers  of  assignment,  blank, 
12;  date  of,  15;  guarantee  of 
signatures  to,  17;  notarial 
acknowledgments  of  signa- 
tures to,  18;  shares  covered 
by,  14;  contents  of  power  of 
attorney  in,  14;  power  of 
substitution  in,  15;  provi- 
lions  of,  10-19;  signatures  to, 
16;  bank  cashier  as  witness 
to,  17;  transferee's  name  on, 
13;  witnesses  to,  16;  words  of 
conveyance  in,  10-11. 

Preferred  stock,  definition  of,  4. 


Private  corporations,  classes  of, 
3;  definition  of,  3. 

Probate  of  will,  who  may  peti- 
tion for,  29. 

Public  corporation,  definition 
of,  3- 

Refusal  to  transfer,  liability  of 

corporation  for,  45. 
Real  estate,  of  decedent,  title 

to,  29. 
Registered  bonds,  definition  of, 

71 ;  form  of  assignment  of,  73 ; 

non-negotiable,  72;  payment 

of  interest  on,  71;  reasons  for 

registration  of,  72;  transfer 

of,  73. 

Scollans  vs.  Rollins,  72. 
Shares  of  stock,  definition  of, 

Signature  to  assignment,  16. 

Stock,  of  decedent,  title  to,  29; 
instruments  of  assignment 
of,  forms  of,  8-9;  right  to 
transfer,  7;  transfer  of,  when 
valid  against  transferrer,  ip; 
transfer  of,  when  valid 
against  corporation,  u;  ways 
of  assigning,  8. 

Stock  certificate,  contents  of, 
6;  definition  of,  5;  duplicate, 
58;  mistakes  in  issuance  of, 
19;  negotiability  of,  62;  re- 
quirements preliminary  to 
issuance  of  duplicate,  60-61; 
right  to  require  indemnity  be- 
fore issuing  duplicate,  59-60. 

Stock  corporations,  purpose  of, 

Stolen  bonds,  title  to,  76. 
Stolen   or  lost   certificates   of 

stock,  discussion  of,  61-68; 

title  of  bona  fide  transferee 

of,  61-64;  owner  of,  estoppel 

by  negligence,  63-66. 


[109] 


Tax  laws,  stock  transfer  and 
inheritance  transfer,  47-58. 

Tenancy  in  common,  definition 
of,  24;  distinguished  from 
joint  tenancy,  23-24. 

Tenants,  transfers  by,  24. 

Testamentary  trustees,  how 
confirmed,  38. 

Transfers,  by  administrators, 
discussion  of,  36-38;  require- 
ments for,  37;  by  assignees  in 
bankruptcy,  23;  by  attor- 
neys-in-fact,  22-23;  by  cor- 
porations, 26-27;  by  execu- 
tors, discussion  of,  28-36; 
by  fiduciaries,  28-44;  by 
guardians,  43-44;  by  individ- 
uals, 20;  by  infants,  22;  by 
insane  persons,  22;  kinds  of, 
20;  by  married  women,  21; 
by  membership  corporations, 
28;  by  partnerships,  25;  by 
tenants,  24;  by  testamentary 
trustees,  discussion  of,  39-43 ; 
by  testamentary  trustees,  re- 
quirements for,  40,  42;  by 
trustees,  38-43;  by  unincor- 
porated associations,  28;  of 
coupon  bonds,  70-71;  of 
registered  bonds,  72-73;  of 
United  States  bonds,  74;  of 
stock,  incident  of  ownership, 
7;  rulings  of  New  York  State 
Comptroller  re  taxes  upon, 
86-90;  of  stock,  steps  in- 
volved, 7-8. 

Transferee,  rights  of,  on  refusal 
to  transfer,  45. 

Transfer  Rules,  91-93. 

Trustees,  appointment  of  suc- 
cessor, 38;  definition  of,  38; 
transfers  by,  38-43;  how  ap- 
pointed, 38;  sale  by,  40-41; 
sale  to  themselves  individ- 
ually, 41;  testamentary, 


transfers  upon  death,  resig- 
nation orremoval  of,  39;  testa- 
mentary, transfers  by,  for 
purposes  of  distribution,  42- 
43;  testamentary,  transfers 
by,  for  purposes  of  sale, 

^40-41-. 

Trust  indenture,  provisions 
of,  38. 

Uniform  Negotiable  Instru- 
ments Law,  69-70;  applicable 
to  corporate  bonds,  70;  ne- 
gotiability under,  70. 

Uniform  Stock  Transfer  Act, 
complete  text  of,  79-85;  in- 
fant's powers  not  enlarged  by, 
22;  provisions  as  to  lost  or 
destroyed  certificates,  58-59; 
provisions  as  to  unauthorized 
delivery  of  stock  certificates, 
67;  ways  to  pass  title  to  stock 
under,  12;  where  in  force,  n. 

United  States  bonds,  transfers 
of,  74. 

United  States  Treasury  De- 
partment, rules  and  regula- 
tions governing  transfer  of 
Liberty  bonds  and  Victory 
notes,  98-105;  regulations  as 
to  lost,  stolen  or  destroyed 
Liberty  bonds  and  Victory 
notes,  103-104. 

Victory  notes,  rules  and  regula- 
tions governing  transfer  of, 
98-105. 

Waivers,  see  Inheritance  Tax 
Waivers. 

Will,  probate  of,  29;  production 
of  certified  copy  of,  35;  val- 
idity and  effect  of,  governed 
by  what  law,  29. 

Witnesses,  16. 


[IIO] 


THE   COUNTRY  LIFE   PRESS 
GARDEN  CITY,   N.   Y. 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 
LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

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Renewed  books  are  subject  to  immediate  recall. 


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